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Share Centre Share of the Week: Interserve

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Ian Forrest, investment research analyst at The Share Centre, picks Interserve as share of the week.

“Support services company Interserve has seen its shares more than double over the past five years. However, the recent dip in the price puts the shares on a relatively low valuation, providing an attractive entry point for investors. The company is seeing strong organic growth in its support services division, has a growing order book and pays a very good dividend which is well covered. As a result we are recommending the company as a ‘buy’ for medium risk investors seeking both growth and income.

“The group has reported that its largest acquisition last year, the £250m purchase of Initial Services, is performing well and subsequently raised the dividend by 10%. According to an update in January, ahead of full-year results later this month, trading has continued in line with expectations. With strong earnings growth forecast for the next two years, the 2016 p/e is set to fall from 13.1 as it currently stands, to just 7.8. This figure is lower than its peers such as Carillion, WS Atkins and Kier Group. The prospective dividend yield is a very healthy 4.7%, which is well above the market average.”

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