The UK government’s stimulus measures did their job keeping the economy relatively buoyant during the pandemic. And this is evident from the real estate market. The housing market saw a massive boom as people rushed in to make the most of the stamp duty holiday. House builders, as a result, continued to see strong order books.
Bricakability’s stock is on the rise
Because of this, property and related stocks did well, like Brickability (LSE: BRCK), the concrete blocks and bricks manufacturer. Its share price is 104p as I write, close to its highest ever levels. The stock, which was publicly listed on AIM in 2019, has been a penny stock all along, and it is only in August this year that it rose above that level. It has stayed above 100p ever since. Let me put it another way. The stock has moved way past its pre-pandemic levels, which I often use as a guiding point to understand a stock’s progress since the pandemic.
Solid results
And I reckon that there could be more growth in store for Brickability. Consider its latest results. The company reported a huge 197% increase in revenue for the six months ended 30 September 2021 compared to the same six months in 2020. Its pre-tax profits have also seen an impressive rise of 120%.
These results have received a huge bump-up from its acquisition of Taylor Maxwell earlier this year, which adds to its portfolio of services that now include timber cladding. However, the company’s like-for-like revenue growth, which is adjusted for the impact of acquisitions, has also been robust at around 54% as well. I also like that it has made the acquisition without taking on a whole lot of debt. Its debt levels have barely budged from last year, because it was funded through an equity raise.
Positive outlook for the near-penny stock
Brickability’s outlook is positive too. It expects that its full-year performance will be “at least” in line with what the market expects. I read that to mean that there is a good chance that it could actually be higher. It is also on an acquisition drive, which could see it expanding fast in the coming years.
What I’d do now
With this strong showing, the stock does look somewhat pricey right now. Its price-to-earnings (P/E) ratio is 25 times, but it could well be the premium that investors are willing to pay for a high growth stock. I reckon that if the economy goes into a tailspin because of coronavirus or inflation or any other threat we can think of, a stock like Brickability could be impacted. And then buying at the present price might not seem like such a good idea.
But going by both its profit-making capacity in the past and with a view to its future, I think it does look like a good stock for me to buy. Penny stock or not, this is one I like.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
