RCR Tomlinson (RCR) is a business that suits this description, and was added to the Opportunities portfolio in November. Many in the market may identify RCR as predominantly a mining services business (given its historical percentage of earnings derived from the sector), however the company has significantly evolved their offering into a number of industrial sectors including energy and infrastructure. We were initially attracted to the business primarily on the view it was well exposed to the increasing infrastructure capex spend on the East Coast (particularly in rail) over the next 24 months, in addition to an increasingly dominant position in the construction of solar infrastructure projects. The remaining mining-exposed business therefore simply provided us with a ‘free option’ if the capex cycle returned, given the market had been unprepared to place any value on growth in the sector up until that point. With current tailwinds now also supportive of that business, this has magnified the earnings upside that we see coming from continuing contract wins and we continue to remain excited about the prospects for the company over the year ahead
From the March Ophir Investment newsletter (free), these guys have a pretty good track record (since 2012 anyway).
RCR Price at posting:
$3.02 Sentiment: None Disclosure: Not Held
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