Questor: its modern products (and imperial measurements) give this pipe maker the edge

However, this is not the stock’s only advantage. Another arises from it being “the largest player in the industry and by far and away the most recognised brand”, said the fund manger, who has strongly outperformed his peer group over the past 10 years, according to FE Trustnet, the fund analyst.

“Polypipe has the broadest product range and a national sales, technical and support team that allows it to work closely with specifiers, contractors and installers,” he said.

“The firm works closely with architects to offer low-energy, carbon-efficient solutions with a high level of technical expertise to cater for the ever more demanding regulatory requirements.

Montanaro said the company’s strong growth – earnings per share have risen by about 30pc a year since it joined the main market in 2014 – should continue, “driven by the ongoing substitution of materials, increasing regulation and the need for carbon-efficiency products”.

Its plastic pipes are often used to replace legacy materials such as clay, copper and concrete. In addition, the Government’s £15bn road investments strategy has resulted in the award of significant road projects that need Polypipe’s products.

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The fund manager also welcomed the appointment of Martin Payne as the new chief executive, saying he was “bringing a fresh view to the group’s strategy”.

This was already in evidence in January when Polypipe announced the planned sale of its French operations for €16.5m.

“This was a low-margin business operating in a more competitive market,” Montanaro said. “The disposal is a positive step to streamline the business and to focus on its core markets – although the UK represents about three quarters of sales, it generates 90pc of profits.”

At the same time as the disposal, management confirmed that trading was in line with expectations.

With the stock offering a free cashflow yield (the total cash generated as a percentage of market value) of 6pc, a forward price to earnings ratio of 13.5 and a dividend yield of 3pc, “there is a lot to like”, Montanaro said.

Questor says: buy

Ticker: PLP

Share price at close: 393.2p

Update: Galliford Try

When we spoke to Montanaro, we took the opportunity to find out the firm’s views on Galliford Try in the wake of the construction and housebuilding firm’s announcement of a £150m rights issue to repair damage inflicted by Carillion’s collapse.

Galliford had been in a joint venture with the failed outsourcer to build a road near Aberdeen. News of the need to tap investors for more money sent the shares plunging by about 20pc.

Questor had tipped the stock at £13.29 in August last year, when we quoted Montanaro’s view that the group was producing “strong underlying financial and operating performance across its three businesses”. The shares are now about 38pc below where we tipped them.

Montanaro admitted that the decision to invest in Galliford had been a “mistake” because of the low-margin nature of its construction division, the one involved in the Aberdeen project.

None the less, it said there was a prospect for capital gains of about 40pc on the predicted share price of 800p after the rights issue, given that the new shares were likely to be offered at a discount of 30 to 35pc to the current price. It predicted that the shares would yield more than 8pc, with the dividend twice covered by profits, and be valued at a price-to-earnings ratio of about 6 after the rights issue.

However, the fund manager said it would wait for the prospectus before it decided whether to take up its rights.

Questor says: hold; await prospectus before investing in rights issue

Ticker: GFRD

Share price at close: 833.5p