Buy 600 Group at 73.5p (wrongly tipped on 2/4/2005 - now 52.5p)
Suggests Bill Johnston of Watshot.com

I have been revisiting machine-tool manufacturer and distributor, 600 Group (SIXH). I say revisiting; embarrassment precludes me from saying when I was last there; I half thought that the manufacture of the Colchester and the Harrison (lathes that is - the workhorses of the factory) had, if not passed into history, passed to some other manufacturing group. Engineering in this country has gone through a long and painful adjustment, and many of us that once lived and breathed manufacturing blamed the machine tool industry at least in part for its weaknesses of poor innovation and design. I almost wondered if Alfred Herbert, the one time doyen was, like 600 Group, busy rationalising and developing its product base and marketing activities afresh - instead of being a name from a vanished past. (But no.)

The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Watshot.com is owned by t1ps.com, which is regulated by the FSA and can be contacted on 02070339389.

Not that things are easy. March 2004, 600 Group sales were 66 million pounds, 2 million pounds down from those of the previous year, and the third decline in a row. These latest figures produced a gross profit of 16.4 million, from which a net profit of 166,000 pounds (0.3p per share) eventually shakily tottered. The interim sales to September were down again from those of the comparable period, but only by a smidgeon; this time the operating profit was 300,000 pounds, which netted down to 0.5p per share. The outlook for the full year looks good, said the Chairman.

I would guess that what has been happening is that the decisive seizing of the corporate reins at 600 Group, its brand names, its installation base and its international network, has been combined with the benefit which a determined management, bent on consolidation and control of the cost base, can achieve in a long-established company. This has coincided with demand from Eastern Europe and the Far East (especially China) - and as the driving force in these emergent economies is the relative cheapness of labour, the advanced precision instruments meant to manufacture to the highest of specifications and to empty the factories of armies of humans is less in demand than more straightforward machinery - so enter 600 Group. (Which is not the same thing as saying that Western Europe and the United States are not important and successful markets for the company, nor that it has failed to innovate).

At 73.5p, 600 Group is capitalised at 42 million. At the present rate of going, current-year earnings of 1p would represent progress - and look at the multiple that that would represent! But we must bring the balance sheet into the equation, and with shareholders' funds of 72 million pounds and most-recently-reported cash levels of 7 million pounds, this explains much; especially as a staunch belief in giving the shareholders an income means that the shares yield 7.5%.

I remarked the other day on my disappointment with my own efforts in respect of high-yielding stocks performing as growth counters as well. Is 600 Group going to step into this category?

The sheer financial strength, the degree to which a weak dollar has disguised recent progress and the unexpected level of optimism both 'at home' and abroad give what is obviously decisive management. a chance. More sobering is the fact that, in strict contrast to so may recent stories, since 2002 10 million has flowed into the P&L Account via the pension scheme credits. But what the hell - here is vigorous management giving fresh life to one of the oldest stories in the British book - I say go for it.

Full year results show promise and it’s surely worth keeping an eye on this Group as any recovery could deliver handsomely for shareholders.

Full research can be downloaded here http://tinyurl.com/o337ljk

A couple of years ago I bought shares in Prophotonix sub 3p because of the following.

600 Group has acquired 22,042,143 ordinary shares in ProPhotonix, representing 26.3% of that company's issued share capital. Consideration for the purchase will be satisfied by the issue of 4,925,621 ordinary shares of 1 pence each in the Company representing 5.5% of the issued share capital of the 600 Group.

ProPhotonix is based in Salem, New Hampshire, USA and consists of two businesses which manufacture LED systems in Cork, Ireland and produce and distribute laser modules and diodes from Hatfield Broad Oak in the UK. In the year to December 2013, Prophotonix reported operating losses of US$1.18m on annual revenues of US$15.60m.

600 Group Plc will become the largest shareholder in Prophotonix, and will seek to work constructively with the board of ProPhotonix to explore possible closer business co-operation in future.

Recently the share price of PPIX has doubled, while 600 group has halved in price since. I think buying 600 group at current levels (assuming they still hold PPIX) could be considered an interesting situation to invest in.