GWA not priced for the upside

Simon Conn, Portfolio Manager at Investors Mutual, highlights GWA as one of the small cap stocks he has been adding to his portfolio. GWA is the owner of the Caroma, Australia’s leading vitreous china (toilets) brand. Conn points to Caroma’s strong market position with a share of between 60% - 70%. This allows the company to generate good free cash that can be reinvested in the business. He also says GWA will be a late cycle beneficiary of the housing construction boom. “As starts lead to completions one of the last things to go in is bathrooms. That is going to lead to increased demand for their product.” Conn says a turn in the construction cycle should be a consideration, however, he emphasizes the need to focus on valuation. “It’s a function of valuation and what is in the price. At 15 times and a very lightly geared balance sheet it is not priced for any of the upside.“ (VIEW LINK)

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Investors Mutual
Fund Manager

Investors Mutual Limited (IML) is a specialist Australian equities fund manager and was established in May 1998 by Anton Tagliaferro. Based in Sydney, the IML team applies a conservative value-based investment style with a long-term focus.

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