One to Watch: A sharpening focus

Published on Thursday 3 December 2009 20:11

VT Group 554p +1p Scotsman says BUY

VT GROUP is a leading support services company, providing engineering and other services, mainly to governments around the world. Primarily based in the UK and United States, the firm employs 12,000 people and over the past five years turnover has increased by more then 140 per cent to 1.05 billion.

The company is structured into three business areas: Government & Critical Services, Defence and VT Inc. VT is active in sectors from aviation to nuclear and provides services from designing, acquiring and then operating and maintaining facilities, through to the support and training of staff.

It recently disposed of its 45 per cent shareholding in BVT Surface Fleet, the shipbuilding and naval support joint venture between itself and BAE Systems, to its partner for over 300 million. This has left VT with about 100m of cash on its balance sheet.

The exit from shipbuilding has left VT entirely focused on support services and it will be using the proceeds from the sale to help expand in the US.

The company recently reported results towards the top end of expectations with EPS growing 16 per cent and operating margins increasing. The order book stands at 4.4bn, which gives it visibility over the next 18 months and organic growth at 8-10 per cent should be viable for the foreseeable future. Add to this growth which will come from acquisitions and the future looks bright.

The shares currently trade on a 2010E P/E of 13.7x falling to 12.4x 2011E, good value for a company with a high level of visibility. Although the shares only yield 2.9 per cent, VT has a progressive dividend policy.

&#149 Craig Yeaman is investment director at Saracen Fund Managers. The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

Marston's

93.1p +3.2p

Broker says BUY

CHARLES Stanley reiterated its "buy" recommendation after the brewer and pubs chain reported a fall in annual profits, but said its focus on family-friendly, food-led pubs was paying off.

Analyst James Dawson said: "Marston's has reported a robust set of full-year results. We retain our price target of 115p."

Halma

243.3p +10.3p

Broker says HOLD

NUMIS Securities has a "hold" rating on shares in Halma, the safety products group. Analysts at the broker, which has a price target of 250p on the stock, described its interim results as "positive".

Halma plans to continue to grow market share and dividends, thanks to investment in Asia and tight cost control.