- The UK market is seeing strong companies become value opportunities
- Coats is well positioned for growth thanks to its market share and pricing power, says Gerlis
James Gerlis, co-manager of TM Tellworth UK Smaller Companies (GB00BDTM8B47), explains why the fund invests in Coats (COA):
We run Tellworth UK Smaller Companies with a balanced approach to style, incorporating both ‘P3M’ stocks and ‘value opportunities’. P3M (product, market, margin and management) companies are those with strong market positions, attractive margins and long-term growth outlooks, which typically justify a richer valuation. Value opportunities are usually good underlying companies but are those that have fallen out of favour with the market. Importantly, to avoid value traps, we look for a catalyst for change, which can drive a re-rating as company performance and investor sentiment towards the stock improves.