By Daniel Hunter
Graham Spooner, investment research analyst at The Share Centre, has picked industrial services provider, Cape, as his share of the week.
“Australia is set to become an increasingly important area for Cape, which is reassuring given the political unrest in the Middle East," Spooner said.
"Asia has been the fastest growing region for the group, benefitting from the demand for liquid natural gas, and further small acquisitions in the region are likely with the latest providing an opening to China.
“Going forward Cape expects to benefit from new plants in emerging markets, maintaining ageing equipment in developed markets and increased emphasis on safety.
“In November the group issued a profit warning as a result of delays in contracts, a one off charge in the UK and depot closure costs in Australia. However, in a recent update management were confident that the recent pick up in contract wins would continue in 2012. As expected, momentum is building in a number of key regions and Cape is entering a sustained period of demand for its services.
“The improved performance in the second half of the year has seen the share price recover back to levels pre-November and now trading at around 10 times this year's earnings Cape still looks good value. We continue to recommend investors ‘buy’ Cape as it remains attractive for continued growth.”
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