Trading idea: Interpump (IP-IT)

We had an Enter Long Strategic signal on August 10, 2020, triggered by our system on Interpump, IP-IT, the Italian Capital Goods Company.

Our system also triggered an Enter Long Tactical signal on December 9, 2021 that imply a likely bullish acceleration. Interpump has a rather strong track record, with a Behavioral score of 10/10, therefore the bullish signal is to be considered as mainly Strategic.

Interpump is a € 6.8 Bn market cap is the world's leader in manufacturing and marketing high-pressure pumps. Revenue is split between two segments : 1/ hydraulic components (68%) including hydraulic pumps, hydraulic power units, valves, etc.; 2/ high-pressure pumps and pistons (32% of sales). Revenues are well diversified, between Italy (16%), other Europe (36%), North America (26%), Asia/Pacific (13%) and other (9%).

Interpump’s business model is centered on acquisitions (about 50 companies acquired since its 1996 IPO) and the development of facilities all around the World (about 45 facilities). The company identifies an acquisition target on the basis of the synergies that can be developed with the other holdings it already owns; after the purchase, it usually re-organizes the company’s operations and layouts, in order to improve margins and production capacity.

Besides acquisitions, regular shares buy back program are proceeded by the company.

For 2021, Interpump is expected to post revenue of € 1.56 Bn, coupled with a €220 Mn net profit. In 2022 revenues are expected at € 1.86 Bn coupled with a € 250 Mn net profit (13.5 % net margin). A double digit EPS growth is expected in the next 2 to 3 years.

Short term catalyst : M&A, shares buy-back programm.

This signal looks consistent with the European Capital Goods sector in major bullish trend. The stock participation within the European Capital Goods sector to bullish tactical signals is at 52% and a strong 67% in strategic signals.