3 Companies That Can Power Your Portfolio to Greater Heights
The recovery in the global economy is getting stronger as the weeks go by.
As businesses cheer the gradual return to normalcy, companies are also displaying green shoots of growth.
This feel-good sentiment should increase over time as a virtuous cycle builds up.
As lockdowns and movement restrictions ease, more people will go out and spend, thus feeding a cycle of consumption that will benefit businesses and restore jobs.
If you want to latch on to this nascent recovery, then you need to search for companies that are riding new trends or have catalysts that can power their growth for many years to come.
Here are three companies that are good candidates for ensuring your investment portfolio can soar to new heights.
AEM Holdings Ltd (SGX: AWX)
AEM offers application-specific intelligent system test and handling solutions to the semiconductor industry.
The group has seen its share price more than doubling from a year ago on soaring demand for its products and services.
Revenue for the fiscal year 2020 (FY2020) jumped by 60.6% year on year to S$519 million, driven by increased orders for customers and registering a new all-time high for the group.
Net profit after tax surged by 85% year on year to S$97.6 million.
AEM declared a final dividend of S$0.04, bringing the FY2020 dividend to S$0.09, up 76.5% year on year from FY2019’s S$0.051 dividend per share.
The future looks bright for the group as the World Semiconductor Trade Statistics (WSTS) has forecasted an 8.4% year on year growth in global semiconductor sales for 2021.
Besides, the pandemic has accelerated the digitalisation shift and boosted the integrated circuit market, which is expected to grow by 11% year on year this year.
The group had just announced that it will be acquiring CEI Limited (SGX: AVV) to solidify its leadership position in serving both electronics and semiconductor companies.
AEM CEO Chandran Nair is also confident that demand for System Level Tests (SLT), a service provided by the group, will grow as the world shifts to higher-end devices that are more complex with an increasing number of integrated, disparate parts.
Growth in the automotive sector and the proliferation of mobile devices will drive long-term demand for more semiconductors, acting as a healthy catalyst for AEM’s long-term growth.
Riverstone Holdings Limited (SGX: AP4)
Riverstone is a manufacturer of both nitrile and natural rubber gloves used in both highly-controlled environments and the healthcare industry.
As of 31 December 2020, the group owns six manufacturing facilities in Malaysia, Thailand and China with a production capacity of 10.5 billion gloves per annum.
Riverstone’s share price has also more than doubled in the last year.
Revenue for 2020 surged by 85% year on year to RM 1.8 billion, driven by a sharp increase in demand for nitrile gloves due to the pandemic.
Net profit after tax jumped nearly five-fold from RM 130.4 million to RM 647.3 million.
The group has declared a total dividend per share of RM 0.22, a substantial increase from the RM 0.037 paid out a year ago.
CEO Wong Teek Son believes that glove demand will remain elevated due to COVID-19 testing and vaccine rollouts.
An increase in hygiene awareness should also lead to higher overall usage of gloves in both the retail and food and beverage segments.
Riverstone is expanding its capacity to 15 billion pieces by the end of 2023 to take advantage of this elevated demand.
Nanofilm Technologies International Ltd (SGX: MZH)
Nanofilm is a provider of nanotechnology solutions in Asia.
The group owns five production facilities in China, Vietnam and Japan, and employs more than 1,500 employees.
Nanofilm has three core business divisions — advanced materials, nanofabrication and industrial equipment.
For FY2020, the group’s revenue increased by 52.8% year on year while gross profit jumped by 54.2% year on year.
Net profit after tax surged by 68.1% year on year to S$58.1 million.
The revenue increase was contributed by the computer, communications, consumer electronics and automotive segments.
The group believes that the total addressable market for its products is set to hit US$455.1 billion in 2023.
Nanofilm is well-positioned to tap on this market to continue its growth trajectory for the foreseeable future.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
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