Christmas Stock picks: Armour

I’m backing George Dexter to deliver superior share price returns for investors in 2010.

Dexter, CEO of Armour Group, has a superlative spring in his step following an excellent set of results for easily the most challenging year in his electronic group’s history. In the 12 months to August 2009, Dexter kept the group in profitable territory, with the pre-tax line in the black to the tune of £1.18 million (2008: £3.59 million). He also boosted cash generated from operations to £7.2 million, reduced net debt to £4.9 million (although this will rise due to the nature of the business) and ensured his venture threw off a dividend of 0.3p. Total sales were down slightly at £51.6 million.

For the uninitiated, Armour supplies consumer audio and visual equipment to the UK, Scandinavian and Asian markets – as well as leads, stands and other peripherals. Its strength lies in its ability to really innovate in the audio entertainment space with products that resonate with its target market (check out its award-winning audio system at www.Qacoustics.co.uk).

Moreover, it boasts a fantastically strong distribution arm and remains alive to opportunistic product launches and clever lateral market moves. For instance, it has tentatively moved into small office/home office furniture, the target demographic of which isn’t a thousand miles from its usual customer base. And neither is the retail access required to sell these wares.

Turnover for this year could jump around 20 per cent to £62 million, profits are slated to come in at £1.82 million and earnings could move from 1.44p to 2.04p. A prospective p/e of 7.7 looks like nonsense to me. Buy.