Investment Column: Galliford looks to set to build on its gains

Iomart; Trifast

Our view: Buy

Share price: 463.5p (+1.5p)

The good times keep on rolling at Galliford Try, the housebuilder and construction company.

The 103-year-old firm yesterday boasted that it had been selected as a partner on three affordable housing contracts worth a total of £584m in London, the South-east and eastern regions of England.

Of these contracts, the biggest at £400m is the renewed agreement between 10 partners and the housing association L&Q which involves the building of 7,000 new homes across London and southern England.

The news helped to push Galliford Try's shares above a 12-month high, continuing their strong rally since December. That said, they remain a long way off the dizzy heights of 710p hit in September 2009, when the housing and construction markets were emerging from the doldrums.

In the same month, Galliford Try unveiled a rights issue that raised £119m to give it a war chest to acquire land at knock-down prices, a strategy that has served it well.

The contract wins released yesterday follow Galliford Try – which generates nearly two-thirds of its revenues from construction projects – saying last month that its profits would be "significantly ahead" of market expectations as it unveiled interim results from 1 January to 4 May.

The company was particularly bullish about its house building division, which is largely focused on London and the South-east and now accounts for about half of group profits.

Indeed, Galliford Try said the housing market had "exceeded our expectations throughout the spring selling season" with a sharp jump in sales reserved to £532m over the four month period.

Its construction arm, which covers projects from schools to hotels, grew less strongly but still delivered a 3 per cent rise in its order book to £1.8bn.

The company also boasted it had been chosen as one of four partners on the £790m Forth Road Crossing project. And in yet more good news, Galliford Try also announced in May that it had secured new banking facilities of £325m until 2015.

The fact that its shares trade on multiples of around 9 times forward earnings only serves to seal the bull case, in our view.


Our view: Buy

Share price: 88.5p (+2.38p)

Iomart admits that the terms "cloud computing" and "cloud-based services" are the "buzzwords du jour" and criticised many companies in the space for trying to sell the hype without the systems to back it up.

In fact, cloud computing can cover a range of services, but in general terms, it means putting a client's data on third party servers with the information accessible through the internet. This takes out the costs of running data centres and much of the IT support for the customer.

Iomart believes it has the kit to walk the walk, and yesterday's full-year results backed that up with a seven-fold rise in pre-tax profits. The chief executive, Angus MacSween, added that the company was in good shape for the future as it had continued to invest in its data centres and staff.

"We are in a market that is growing and that is here to stay and we fully expect to participate strongly in that growth," he added.

To add to the allure, cash generation is good, and Iomart's shares trade on multiples of about 16 times forward earnings, making them well worthwhile given the growth prospects.


Our view: Buy

Share price: 47.75p (-0.25p)

There was much in the way of doom and gloom around manufacturing yesterday after new figures pointed to a slowdown in the sector's pace of growth in the UK. But on the markets there was some good news.

Trifast, which manufactures and distributes industrial fastenings and other components, issued better than expected full-year results.

And besides the headline numbers - gross margins improved to 25.2 per cent, while margins on earnings before interest, tax, depreciation and amortisation were up to 5 per cent – there were also some positive hints on the dividend. No payout was proposed, but the company hopes to "address" the yield this year, which augurs well, in our view.

In fact, we would wade in now, before the company makes a firmer announcement on the matter. A positive decision could drive the shares higher as income investors move in.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor