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Stock of the week: Costain

Written by:
Ian Forrest, investment research analyst at The Share Centre, picks British construction and civil engineering solutions provider Costain as stock of the week.

Engineering group Costain has recently reported a record level order book of £3.9bn which the company mainly attributes to the significant number of contract wins in 2016. Such wins include the group’s recent contract to work on Transport for London’s £500m surface transport project which includes the upgrade and maintenance of bridges, tunnels and highways across London.

The firm’s management team attributes the company’s success over 2016 partly to customers increasingly looking to consolidate their supply chains and give more work to reliable companies. Interested investors should appreciate that the firm has also increased its revenues secured for 2017 to over £1.2bn.

As improving the infrastructure system in the UK is a priority for the majority of political parties, Costain looks set to be a beneficiary in future years. We therefore recommend the shares as a long-term buy for a medium risk balanced portfolio.

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