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  • Writer's pictureMark Watson-Mitchell

‘Remarkable’ CMO has further to run, says JOHCM

Shares in the UK’s only online building materials retailer CMO Group (CMO) are ‘wrong by at least 300%’, says JOHCM manager Mark Costar.

Citywire A-rated Costar holds CMO in his £304m JOHCM UK Growth fund. In his latest update he said the group operated in an ‘underpenetrated category’, continued to gain market share and offered superior service and the widest range of products in the market, as well as ‘convenient direct distribution’.

‘The company, similar to its sector peers, has seen a recent normalisation in demand from previously elevated levels,’ he said.

‘Unlike its peers, however, which have broadly taken such a slowdown in their stride… CMO stock has been battered to quite extraordinary levels.’

The manager said the stock, on a 26% free cashflow yield, was ‘trading at less than the funds it raised at initial public offering for growth capital and delivering high single-digit profitable sales growth even in these tougher conditions’. Costar dubbed the situation ‘remarkable’.

Shares in CMO closed flat at 29p on Tuesday, having crashed more than 80% so far this year.

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