Concurrent Technologies

A cash rich growth company expanding its margins, Concurrent Technologies is an underappreciated small cap gem.

Colchester-based Concurrent, guided by managing director Glen Fawcett, makes ‘high-end’ embedded computer products with low electrical power requirements which offer high levels of reliability. As a result, they are perfectly suited for use in applications spanning the defence, telecommunications and aerospace sectors, as well as the industrial and scientific markets.

Concurrent has just delivered sparkling interim results to June, showing 13% growth in pre-tax profits to £1.37m, as gross margins swelled to 61% (2008: 54%), on near-20% turnover growth to more than £6.5m. Generating cash and unfettered by debt, Concurrent closed the period with £5.22m cash, supporting an 11% increase in the dividend to 0.5p.

With demand from commercial customers weakening in recessionary climes, Concurrent is drawing strength from the parts of the more resilient defence market in which it operates, seeing strong interest in its products for projects involving electronic, aerial and battlefield surveillance. Significantly, Concurrent recently launched its most sophisticated product to date, based on the latest Intel ‘quad-core’ processor technology, well suited for use in the defence and telecommunications sectors, as well as the homeland security market, and set to drive further growth.

Though Concurrent continues to scout for acquisitions, low-risk organic growth remains the focus. For the full year, Concurrent should be able to maintain pre-tax profits of £3m and earnings of 3.3p despite the recessionary backdrop, whilst a 1.4p dividend looks on the cards. First recommended by Growth Company Investor at 30.25p in 2006, Concurrent shares sell for an undemanding 11 times forward earnings, offer an appealing 3.8% yield and therefore inhabit strong buy territory.