This company is a good example of the steady performer that has large director holdings a low rating and net cash where the board made the decision to move down to the Aim market...I highlighted the trend in my last post in the Pub ......and now we have


ELECO (ELCO) 65p

The company has a good website which will give you a fair understanding of the products and building systems they provide for the construction sector...they also provide specialist software for the same sector and that division has recently gone into profit for the first time. Their website is....

http://www.eleco.com/


I have held these for 18 months since WCB100 flagged them up on another board and he actually attended an Agm and was impressed by the management which brings me nicely on to our friend the weatherman ...that charming man known to all who is clearly doing a bit off work at Eleco in his spare time ....after all those stints after the news only take three minutes of his time surely !!!

John Ketteley is the chairman at Eleco and clearly has confidence in the future of the company as shown by his addition of nearly 365,000 shares when they moved down to Aim.....of course the SP was in a lull for a period and has slipped further since the May/June small cap sell offs but there are many reasons for looking at ELCO. The RNS for the director buys can be found here



http://www.investegate.co.uk/Article.aspx?id=200603240700343193A

A brief look shows they were forced to sell but substantially topped up


Having regard to the fact that AIM listed shares may not be held in PEPs or
ISAs, on 19 April 2006, Mr John Ketteley, a director of the Company, and his
wife, Mrs Susan Ketteley sold, respectively, 480,041 and 464,457 ordinary shares
in the Company at 58 pence per share. On the same date Mr John Ketteley, his
wife and beneficial interests acquired 1,309,276 Ordinary shares in the Company,
at 58p pence per share.




The interims in March can be found here...


http://www.investegate.co.uk/Article.aspx?id=200604201627427641B


Now these were exceptionally good results with turnover up 17% and pre tax up 317%.....the share price had a little lift up from there to around 78p from memory but all the above factors with a soggy Aim move and the damp investment months of early summer sent the SP back down.

The forecast recently released by Hardman is for 5.9p this time ....incidentally the results should be out within the month and usually second week in October....and 6.4p for next year I suspect that with the strong interims these can be beaten and the 2007 forecast looks possible this time round to me. The yield has been increasing too and with strong director holdings should continue to be progressive and around 3%....the cashflow is superb as shown in the interims. There is net cash of around 800k and should be far higher at the finals.

Historically the turnover growth of the past few years has been between 10-15% and 17% for the interim stage was particularly pleasing and I am not the only one to have been building my stake alongside the Weatherman....A keen buyer over the water has been Allen&Co an investment group who are generally involved in shrewd and well timed investments they added a cool million shares recently and hold over 10% of the company .....I have tracked down some information on them here...



http://money.cnn.com/magazines/fortune/fortune_archive/2004/06/28/374371/index.htm



So overall there really do not seem to be any storm clouds on the horizon for the aptly named chairman and investors alike.....I have doubled up my holding early this morning but I see that I am not alone and would recommend trying to hold off to see if some sellers come out at this level as it had already risen to 68p from my buying level of 63/64p this morning.

However with strong finals in line with the interims ( and the outlook then was very positive) I do feel that the price can reach new highs in October and a Carmensfella quickie target of 20% at 77p will be the very least of my expectations. It may well be a nice longer term hold if the outlook is confident from the company weather forecaster....it has been a good hold thus far for me as they were never in a PEP or ISA

Just watch the weather charts though to time your purchase and try not to chase the sunshine would be my recommendation though. Stay tune to the hurricane news from the States you just never know what may blow across!!


David