Stephen Rawlinson
20 June 2017 · 2 min read

Market Commentary - Housing, Infrastructure, Construction and Services 20th June 2017

The moves yesterday saw G4S lead the table with a 4.6% rise to 336p. Homeserve was the worst performer, down 1.1% to 779p a move that is within the scope of trading on the day.

We have an early start for a site visit so no comment on Wolseley’s interims, apologies.

The moves yesterday saw G4S lead the table with a 4.6% rise to 336p. The market has taken a while to get to understand the story with this stock and in some areas not really understood its intent with technology developments, or not wanted to, perhaps. It no longer spends big bucks on M&A as it is growing well enough organically and via bolt-ons. It’s back in the FTSE100 which was never a target but is a positive outcome. Capita may also be FTSE100 bound as it was the second best riser yesterday, up 3.8% at 670p; it will need to get to 840p to gain entry at current share prices but with a new CEO and a clarification of its (his or her) strategy and who knows. Our view is that much work is needed to identify what makes Capita a better choice for customer’s than the alternative, given the technology disruption in its area and the company’s lack of investment in bespoke know-how and IP. The market certainly seems risk-off with CPI.

Homeserve was the worst performer, down 1.1% to 779p a move that is within the scope of trading on the day. Much as we have substantial concerns about HSV, especially at current valuations levels, the market want to buy the story right now. Galliford Try struggled to make progress, down just 0.6% yesterday to 1166p. The message seems not to be getting through to investors, institutional or retail; and the latter should be very attracted to the story of substantial growth and the 8% yield.

 

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