Bottom Line: Polypipe strength

POLYPIPE'S shares have had a dreadful year, falling from 180p to 144p since January along with the rest of the building sector. With everything else going relentlessly well, that is a buying opportunity.

Profits have grown every year since flotation in 1985. In the year to June they rose 21 per cent to pounds 20.6m, earnings were 19 per cent higher and the dividend was increased 10 per cent to 2.3p.

That was achieved despite a 20 per cent increase in the price of PVC, Polypipe's main raw material, and reflects the inherent strengths of the business.

Unlike its peers, Polypipe invested throughout the recession. Last year it did so at twice the rate of depreciation and it plans to continue for the foreseeable future.

Capital expenditure keeps unit costs low and funds an impressive programme of new product launches, which in turn fuel the company's steady rise in market share.

Last year it added a further 3 percentage points to take 22 per cent of the British market with gains in domestic drainage.

Polypipe matched next year's forecast this year, so analysts are now pencilling in profits of pounds 24m to June 1995, putting the shares on a forward p/e of 14. Compared with sustainable growth of 20 per cent that is cheap.