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Share of the Week: Costain

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Graham Spooner, investment research analyst at The Share Centre, picks infrastructure specialist Costain as stock of the week.

This week’s share of the week is British construction and civil engineering solutions provider, Costain. Due to announce its half year results in mid-August, the group has remained upbeat about its financial position, recently announcing that it expects to meet expectations.

Boasting a strong order book standing at £3.7bn and a strong balance sheet, though unchanged from its update earlier in the year, it reported in July that it is  a preferred-bidder for a £400m contract. The group are involved in high profile projects such as Crossrail and London Bridge station; the success of the M6 smart motorway contract has allowed it to establish itself as a leading smart infrastructure company.

The group is also beginning to place increased emphasis on the importance for combining technology and infrastructure which in turn is creating more opportunities. Management highlight the fact that customers are increasingly looking to consolidate their supply chains and give more work to companies that have delivered projects on time and to budget. Costain look to be increasingly well placed to benefit from this.

Improving the infrastructure system in the UK is something that the majority of political parties agree on. Costain looks set to be a beneficiary of this over future years. We recommend the shares, which have fallen back over the last month, as a long-term ‘buy’ for a medium risk balanced portfolio.

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