黑洞社区

Leslie Kent, Seymour Pierce

Kent is keen on a fledgeling housebuilder that has boldly bucked the trend of its contemporaries by moving from Ofex to a full listing on the stock exchange. Kent鈥檚 materials choice is ex-Tarmac suitor Aggregate Industries. Country and Metropolitan (77.5p) Country and Met is a residential property developer/housebuilder with a difference. It not only assembles land for its own and others鈥� consumption, but also creates sustainable communities on brownfield sites such as former hospitals and Ministry of Defence establishments. It also has a consistent profit record and excellent prospects for the new year. Aggregate Industries (63.5p) Although we expect UK markets to be flat in 2000, some materials producers should edge ahead of their rivals thanks to better ways of making their products. In ready-mixed terms, Aggregate Industries鈥� subsidiary London Concrete appears to be gaining market share, and the market for hard garden landscaping is gaining momentum. In the USA, the government鈥檚 roadbuilding initiative is beginning to be put into practice.

Alastair Stewart - Flemings Securities

Watch out for the mini-conglomerate with the funniest name in construction, and a materials producer that has dug its way back to its core business. Peterhouse Group (252.5p) Any group that started life as Totty Construction is worth a second glance. At least four acquisitions later, the name has been dropped and these guys look like they could go places. The company delivers excellent margins in construction, services and environmental monitoring. The deal to buy contractor Eve will take Peterhouse into new growth sectors, including servicing mobile phone infrastructure. A possible reclassification into the higher-rated support services sector could further boost the stock. Blue Circle Industries (357.25p) After its ill-judged detour into lawnmowers, boilers and bidets during the 1980s, Blue Circle has returned to its core business: cement. It has shed the non-core activities and has used weakness in the emerging markets to make well-timed acquisitions in Malaysia, the Philippines, Egypt and Greece. The stock has fallen 27% on fears of the short-term implications of these moves. But these are long-term growth markets and we believe that, when investors realise the value enhancements of these deals, the stock will rebound strongly.

Stephen Rawlinson, Peel, Hunt & Company

Rawlinson reckons on former market darling Jarvis to do better this year and penny stock SWP to perform on percentage points. Jarvis (240p) Jarvis鈥� share price has taken a tumble for all the wrong reasons. It is not the business that needs to recover, but the market鈥檚 perception of it. Jarvis is a low-cost operator and is hungry to do well. It serves growing markets and has an innovative approach. Its major customer, Railtrack 鈥� which accounts for 25% of revenue 鈥� has big plans for track, and Jarvis alone has the men and machines to put them into operation. The traffic management part of of the company has unique products and services. The capital projects arm has won some high-value work, including more than 拢120m of contracts in the University Partnerships Programme. SWP (2.5p) Choosing SWP Group is a bit of a cheat on my part because of its size 鈥� when you start the year with your shares trading at 2.5p there is a good chance of winning. SWP is better known in the industry by the brand names of its main products, Fullflow, Crescent of Cambridge and DRC. It has not always made a profit, but over the past 12 months it has been transformed by a new board and chairman. They expect the firm to be profitable this year. The order book is strong, the cost base is right and the combination of unique products and a stable market mean that sales and margins will increase.

Mark Hake, Merrill Lynch

Hake hopes for better things from a leaner Taylor Woodrow this year. His materials choice is the unique Ultraframe. Taylor Woodrow (136p) 1999 was a pretty poor year in stock market terms for Taywood, but 2000 should be more upbeat. The contracting business is being shaped into a leaner, more focused operation; UK housing should remain resilient and the group鈥檚 North American arm will continue to enjoy good trading conditions. In commercial property, the timing of project completion should result in a sharp move upwards in development profit. Ultraframe (478.5p) This is a unique company, manufacturing conservatory roofs and roofing systems. In a growing market it has a dominant UK share with among the highest net and gross profit margins of any materials group, reflecting an extensive array of patents and a highly efficient manufacturing cost structure. A recent move into the USA promises to open up this market, which is 10 times the value of the UK鈥檚.

Mike Betts, JP Morgan

Betts has gone for Sir Neville Simms鈥� new baby. On the materials front, it is 鈥渧ertical integrator鈥� RMC all the way. Carillion (111.5p) We expect there to be consolidation in the contracting sector in 2000 and Carillion is more likely to be part of it than most. The management is also heavily incentivised to get the share price to perform 鈥� they have the chance to increase their investment tenfold if they can get the price to double in the next three years. RMC (817p) We are big fans of RMC鈥檚 acquisition of Rugby. It has started the vertical integration snowball rolling in the UK and others will follow. We eventually expect there to be three or four vertically integrated groups, each taking a 20-25% slice of the UK aggregates, ready-mixed concrete and cement markets. Our valuation of RMC is more than 1200p a share, 50% above the current share price. We also expect it to benefit from an improving market in Germany.