They may have very different business models, but the companies have several things in common. Firstly, their share prices are all in blue-sky territory, so there is no technical overhead resistance. Secondly, investors have adjusted upwards the sterling valuation of the equity in these companies to factor in the slide in sterling this year, and understandably so, given their substantial overseas interests. And thirdly, all the companies are in earnings upcycles, so they offer potential for ongoing multiple expansion and further earnings beats.
As readers of my columns will be aware, I regularly reappraise the investment case of companies on my watchlist to take into consideration any new information that has come to light and which has a bearing on my fair value target price. Somero Enterprises is a good example as the landslide victory for the Republican Party in the US election has created a 'Trump' effect for companies with exposure to US infrastructure. Indeed, since my article a fortnight ago ('Exploiting earnings potential', 14 Nov 2016), the shares have rerated sharply and have hit my 230p upgraded target price. As a result, they have risen by almost two-thirds since I initiated coverage at 140p ('On solid foundations', 22 Apr 2015), and are now priced on 10.6 times cash-adjusted earnings estimates for 2017. That's still not expensive in my view, and certainly doesn't factor in any upgrade potential from the anticipated $1 trillion (£800bn) infrastructure programme outlined by President-elect Donald Trump.