A 37% year-on-year increase in the order book and plans to invest heavily in its competitive position should help sustain the re-rating at gas cylinders, valves and biogas specialist Pressure Technologies (PRES:AIM).

The plan is to invest a significant chunk of its healthy cashflow in capacity expansion and productivity improvements to ultimately increase profits. Despite this outlay Charles Stanley has free cashflow (FCF) totalling £2.6 million in the September 2015 financial year and based on the Sheffield firm’s enterprise value of £40 million this implies an attractive FCF yield of 6.5%.

The company is also looking to pursue growth through acquisition, as reflected in last week’s (13 Dec) purchase of a 40% stake in gas transport specialist GTM Manufacturing.

Heavy exposure to the oil and gas industry could be seen as a negative given in this week’s Sector Report since we are downbeat on the prospects for the oil services sector. Yet Pressure Technologies’ niche focus should enable it to grow market share even if the wider industry is under the cosh.

We are inclined to agree with the house view that the shares can go higher from the 415p mark.