We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Sunday share tips: Mitie, Costain

Sun 21 April 2024 18:10 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - The Financial Mail on Sunday's Midas column tipped shares of Mitie to its readers, highlighting it shift from facilities management to facilities transformation.

To back up her call she pointed to "plenty of experts" who argued the shares still had room to rise, notwithstanding their recent gains.

Midas also judged the shares to be "relatively cheap" on most valuation metrics.

That was on top of the shares' roughly 3% dividend yield.

"There is potential good news in the pipeline. Mitie has made several acquisitions which could add more earnings to the pot, while share buybacks could push its valuation higher," said Midas.

"[...] Most analysts expect them to rise to over 140p. Buy."

The Sunday Times's Lucy Tobin judged construction and engineering group Costain's shares to be a 'buy.

Yes, the outfit was "vulnerable to "the ebbs and flows of contract-awarding mandarins," she said.

But over four-fifths of its sales for the current year had already been booked and according to its boss, Alex Vaughan, the value of that was nearly three times 2023's earnings.

The company had also "dramatically" cut its pension fund contributions.

Furthermore, the shares were trading on just five times earnings for 2024.

There was also a relatively small difference between its 164m of net cash on hand and its 217m market capitalisation.

Tobin said that was proof of the shares' good value.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.