Vesuvius Shares – Buy or Sell?

Vesuvius plc is an engineered ceramics company based in the United Kingdom. Generally, when people think of ceramics, they call to mind clay pots, ornate vases and crockery – however, Vesuvius’ merchandise is certainly not of this ilk. Their products have a diverse range of commercial applications and are used in the glass industry, and the solar energy sector, amongst others.
Given the rise of solar energy in the 21st century, the businesses that provide the industry with necessary materials and products have provoked as much interest as solar energy providers and innovators themselves.

It is important to note first that despite the apparent growth of solar energy since 2000, this has not resulted in a corresponding rise in sector profitability. According to a 2013 MIT report, while solar energy companies rarely lose money, few generate significant incomes either. When solar energy shares are valued highly, it is often on the basis of speculation – hypothetical future value. Solar energy is also but one of several renewable energy sources – wind, hydropower, and biofuel are three alternatives that are also gaining traction and are proving more attractive to investors, governments and industry alike. This means that solar power could, in future, be jettisoned in favor of new technology – or, at least, side-lined. In turn, this could mean a significant chunk of Vesuvius’ revenue could dwindle in years to come. A downturn in solar energy’s fortunes is not a certainty, or even perhaps likely – but it is a potential, and whilst the prospect exists, caution is advised.

However, Vesuvius’ solar products are not the be all and end all of the company’s business. The firm’s hydrocarbon processing division provides vital functions to power generation organisations internationally, and are one of the world’s largest providers of products used by the glass manufacturing industry. Both of these divisions have shown steady growth during the first two decades of the new millennium. The diverse stable of services offered by Vesuvius shields the company overall from the potentially deleterious impact a decline in solar energy usage would entail; Vesuvius is well-placed to deliver growth in the long term, as long as other areas perform strongly.

It is worth underlining that Vesuvius almost certainly is not a share that will be attractive to traders seeking quick returns. The firm’s stated goal is to deliver stable and sustainable profitability and go to great lengths to ensure consistent and stable performance. The company appears generally averse to taking risks, meaning there is little scope for share price fluctuation or significant moves upwards or downwards. This means that Vesuvius is more the reserve of investors – those who wish to hold for the long term and receive consistent dividends. Whilst those seeking thrills and significant cash rewards may wish to give Vesuvius a miss, then, investors with long-term strategies may find Vesuvius highly compelling. The firm’s primacy in many niche areas is a potential indication of consistent performance in years ahead.

Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

This report does not constitute a personal recommendation and does not take into account your personal circumstances or appetite for risk

Kit Klarenberg is a freelance journalist and communications professional, specialising in finance.

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