These three top FTSE 250 shares are going from strength to strength. They offer big dividends now and I’m tipping them to continue doing  so. Why not take a look?

A golden choice

It’s a popular conviction in investing circles that having exposure to gold is a good idea. If the world goes to hell in a handcart, at least savers can take comfort in the yellow metal, a much-loved safe-haven commodity for millennia.

One great way to get bullion exposure is to buy shares in FTSE 250 mining Goliath Polymetal International (LSE: POLY).

Firstly, it can be snapped up for next to nothing, the company carrying a forward P/E ratio of just 9.1 times. Secondly, Polymetal carries inflation-smashing dividend yields of 5.4% and 6.9% for 2018 and 2019 respectively. And lastly, City analysts expect earnings growth to click through the gears in the next couple of years (a predicted 4% rise for this year is anticipated to jump to 27% in 2019).

The number crunchers remain resolute over gold prices for the next couple of years at least. Added to the steps the Russian miner is taking to boost production, the profits outlook is looking better and better.

Flying high

BBA Aviation (LSE: BBA) is another company from Britain’s second tier share index that I’m tipping for great things.

I’ve talked before about the transformative acquisitions it has made to bolster its fixed base operation (FBO) network across the world, and I said that it shouldn’t be long before BBA embarks on fresh M&A action. So it has come to pass with the business buying aftermarket service provider Firstmark for $97m earlier this month, a move that boosts the company’s position on the East Coast of the US.

BBA may be expected to endure some little earnings turbulence in the near term, a 6% slip currently being forecast for this year by the City. But it’s expected to come roaring back with a 12% rise in 2019, and I’d bet that its ambitious expansion programme should keep earnings sailing broadly higher in the years ahead.

A forward P/E ratio of 17.1 times may be a little expensive. However, juicy dividend yields of 3.7% and 3.9% for 2018 and 2019 respectively help to take the edge off.

Build a fortune

My final pick for this article is Morgan Sindall Group (LSE: MGNS). Earnings growth is expected to continue through the medium term at least, with rises of 19% for 2018 and 1% for next year currently being anticipated by City boffins. This gives rise to a rock-bottom forward P/E multiple of 9.5 times as well as predictions of further dividend growth. Thus dividend yields sit at a chubby 3.7% and 3.9% for this year and next respectively.

It doesn’t require a huge stretch of the imagination to see dividends continuing to rise beyond this period either. Steps to improve the quality of earnings have helped margins to detonate at its core Construction and Infrastructure division, up 60 basis points to 1.7% between January and June, and there’s still more upside to be had.

When you consider the excellent revenues opportunities at its Urban Regeneration arm too, I reckon Morgan Sindall is a share that should keep providing excellent sustained earnings and dividend growth long into the future.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

This may sound dull, but consistent, steady growth can generate surprisingly large profits for patient investors. And it’s much easier to make money this way than trying to time your investments in volatile, high-risk stocks.

Today I’m looking at two firms that have been very consistent in recent years.

A strong pipeline

Property and construction firm Henry Boot (LSE: BOOT) has been in business for 132 years, and is still chaired by a member of the Boot family.

The group’s sales rose by 33% to £408.5m, while pre-tax profit climbed 40% to £55.4m, according to full-year accounts published today. 2017 earnings of 32.1p per share mean that profits have now risen by 280% since 2013.

The group’s management upgraded 2017 profit guidance in October and again in January, as several projects were completed more quickly than expected. This strong momentum is expected to continue in 2018.

Chairman Jamie Boot said today that although the firm “is mindful of the cyclical nature of our marketplace,” current expectations are that economic conditions “will be similar to 2017 for the next two years.”

Mr Boot said that the firm has a “strong pipeline” for 2018 and that customer sentiment remains “positive”.

A dividend-growth buy?

The group’s long history suggests to me that its management has a prudent approach to managing market cycles and controlling risk. Today’s results seem to confirm this view. Net debt fell from £32.9m to £29m last year, giving a gearing level of just 11%.

The shares trade today on a 2018 forecast P/E of 11, with a prospective yield of 2.8%. That seems reasonably attractive to me, although it’s worth noting that at 300p, the stock trades at a 50% premium to its book value of 203p per share. As a result, I’d rate this as a dividend-growth buy, but not a value investment.

Up 25% in one year

One company I rate highly as a potential alternative to Henry Boot is construction and infrastructure services group Morgan Sindall Group (LSE: MGNS).

Like Boot, this £558m firm has repeatedly outperformed market expectations over the last year. Broker consensus forecasts for Morgan’s 2018 earnings have risen by 30% to 131p over the last year.

The group’s shares have doubled over the last five years, but strong profit growth means they still look reasonably affordable, on 9.5 times forecast earnings and with a prospective yield of 3.9%.

A class act

One reason for this cheap rating is that the market is wary of the risk that the construction cycle could slow. A reduction in activity levels could cause profits to fall rapidly. But like Boot, Morgan Sindall has a strong balance sheet and a confident outlook.

The group’s order book rose by 6% to £3.8bn last year, with particular growth in partnership housing and property services. Both of these divisions operate mainly in the social housing and the rented sector, where demand for property is strong at the moment.

I believe Morgan’s diverse mix of business and its strong focus on cash generation make it one of the very best operators in this sector. The shares have fallen by around 15% since November. I think this could be a good buying opportunity.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Of course it did stop. After hitting a 52-week high of 462p, the stock lost nearly 30% of its value in June and July.

The shares have since recovered some of their losses and last week’s interim results revealed that sales rose by 41% to £1,367.2m during the first half, while operating profit climbed 33% to £103.3m.

JD has now announced plans to combine with rival Sport Zone in Spain and Portugal, giving the firm the opportunity to become the second-largest player in these markets. Is this growth machine still alive and well?

New stores drive growth

Most of the growth seen during the first half came from 40 new store openings. Like-for-like (LFL) sales growth in UK and Ireland stores was 3%, while in mainland Europe it was 7%. These are solid figures, but are much lower than the double-digit LFL figures reported by JD over the last few years.

The planned deal to combine with Sport Zone should help to maintain sales growth and boost profit margins. Sport Zone has 140 stores in Iberia and generated sales of €226.7m last year. JD already has 171 stores in Iberia, and the combined group will be the second-largest sports retailer in the region.

Although this deal seems promising, it’s worth noting that JD will only have a 50% stake in the combined group. Its effective store count will actually fall slightly, to 155. Any gains will be dependent on sales growth and cost-cutting.

As things stand, JD shares trade on a forecast P/E of 17 for this year. Earnings growth of 10% is expected next year, giving a P/E of 15.5. This valuation seems reasonable, so I’d hold for now.

A surprising success

One of the most successful stocks in my own portfolio this year is construction and infrastructure firm Morgan Sindall Group (LSE: MGNS). This £590m group has risen by 77% so far in 2017, as it’s delivered a succession of strong results and upgraded guidance.

August’s interim results showed that revenue rose by 14% to £1,307m during the first half, while the group’s operating profit rose by 39% to £24.3m. Net cash at the end of the period was £97m, £61m higher than at the same point last year.

This positive cash generation is an important indicator of progress in my view, as it suggests that the group’s reported profit rise is being backed by genuine cash flow. This isn’t always the case with growth businesses.

Much of the group’s growth appears to be coming from its Fit Out division, which provides refurbishment and interior fit-out services for offices and commercial premises. Adjusted operating profit from this division rose by 27% to £14.6m during the first half.

My concern here would be that this type of work could collapse in the event of a recession. However, the group’s record order book for fit-out work suggests the economy is in good shape at the moment.

Morgan Sindall shares don’t look overly expensive to me. The stock trades on a forecast P/E of 12 and offers a prospective yield of 3.3%. I plan to continue holding my shares.

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Roland Head owns shares of Morgan Sindall Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

While other construction companies have suffered profit warnings and sinking share prices due to worries about the health of the domestic economy, Morgan Sindall (LSE: MGNS) has been off to the races over the past year with its share price rocketing more than 120% during that time.

The company’s secret has been its diversified business model that offers not just the usual construction and infrastructure services, but also higher margin services such as fitting-out offices, maintaining properties and partnering with councils to build and redevelop housing stock.

In the six months to June the benefits of this model were clear as revenue from each of its business lines increased by at least 9% year-on-year (y/y) with total sales for the period rising 14% y/y to £1,307m. An improvement to margins across each business line, as well as above group average growth from the higher-margin office fit-out division, led to group operating margins rising from 1.6% to 1.9% y/y and overall operating profit rising to £24.9m.

Looking ahead, there’s reason to be confident this performance can continue as the group order book has risen 5% to £3,800m with 68% of this order backlog for 2018 and beyond. Most encouraging is the fact that the fit-out business backlog rose 22% y/y to £568m, which is important as this is the group’s most profitable business with operating margins of 4.3% in H1.

And while Morgan Sindall is still exposed to the health of the broader construction market, I like that its founder and CEO John Morgan has both skin in the game with a 10% stake, and a conservative approach with net cash at period-end a very health £96m. All these positives mean the company’s shares are pricier than rivals’ at 13.7 times forward earnings, but they still offer a nice dividend that currently yields 2.45% and is growing by double-digits. I’m not sure I’d invest in a construction company at this point in the economic cycle, but if I did, Morgan Sindall would be at the top of the list.

Cleaning up 

Another under-the-radar stock that’s been performing well is workwear and hotel and restaurant textile renter Johnson Service Group (LSE: JSG). Shares of the company are up in value over 45% in the past year thanks to double-digit revenue and profit growth from acquisitions and organic growth.

In 2016 this combination helped boost sales by 36.4% y/y while synergies related to acquisition integration and increased cross-selling opportunities boosted operating margins to 16.2% and increased adjusted operating profit by 45.6% y/y to £37.7m.

There’s considerable room for both sales and margins to continue their upward trend as the group uses its increased scale to target larger customers, pursue further bolt-on acquisitions and drive down supply costs through increased bargaining power. The group is already setting the stage for this future growth by investing in its factories to both increase efficiency and expand production capacity.

However, after appreciating so quickly over the past year, the company’s shares are looking quite pricey at 17.1 times forward earnings. While the company is growing nicely, this valuation is above the group’s historic average and means would-be investors should exercise caution.

The post This shock growth stock returned over 120% in the past year appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Favourable tailwinds

First up is Ashtead Group (LSE: AHT). The international equipment rental company is benefiting from favourable tailwinds as a weak pound and improving US construction activity underpin expectations of continued earnings growth.

As the US market accounts for more than 80% of the group’s revenues, Ashtead has much to gain from the country’s improving economic outlook. And in addition to cyclical tailwinds, the group’s growth prospects are also bolstered by structural factors, such as the chronic underinvestment in critical infrastructure over past decades, which has created an urgent need to repair, renovate and replace its roads, bridges, and other infrastructure projects.

As expected, given the nature of the business, its rental operations are extremely cash generative and this has meant its dividend has been covered comfortably by free cash flow. And although the stock has a prospective yield of just 1.9% for the current year, I reckon there’s plenty of scope for dividend growth given that the forecast payout ratio is just over 25%.

Two reasons

There are two reasons for why I prefer Ashtead to others in the sector. First, the company has a great earnings track record, which demonstrates the robustness and resilience of its business model.

Over the past five years, underlying earnings per share grew by a compound annual growth rate (CAGR) of 44.6%. And looking ahead, City analysts expect the group to continue to grow earnings in double-digit percentage terms, albeit somewhat more modestly, with forecasts of underlying EPS growth of 15% this year, and 11% in 2018.

Second, the company’s size gives it a significant competitive advantage. Its larger scale allows it to spread overhead costs more broadly and helps it to negotiate better prices with suppliers. This has enabled it to deliver EBITDA margins of almost 50% and produce returns on investment ahead of its peers.

With a forward P/E of 13.4, the stock may not be as cheap as some in the sector. However, it’s valuation doesn’t seem too demanding given that the average FTSE 100 company trades at 14.6 times their expected earnings this year.

Growing order book

Also offering upbeat growth potential is Morgan Sindall (LSE: MGNS). Business at the construction and infrastructure group is booming as growth from regeneration projects drives its order backlog higher. At the end of last year, its order book rose 29% to £3.6bn, while adjusted operating profits increased 26% to £48.8m.

The group has been making good progress on its development portfolio to regenerate town centres and has a strong visible pipeline of future regeneration opportunities. Morgan Sindall is also targeting improved operational performance as it continues with its cost reduction focus, particularly for its new contracts.

The stock looks affordable to me. City analysts forecast adjusted earnings of 97.4p per share this year, putting the stock on a forward P/E of 12.7. What’s more, investors could look forward to an expected 14% dividend hike this year, which would push the payout up to 40p a share and give it a prospective yield of 3.2%.

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Jack Tang has a position Ashtead Group plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With that in mind, here are two shares which could prove to have been dirt cheap at the present time.

Growth potential

Engineering services company Renew Holdings (LSE: RNWH) continues to post steady growth numbers. In its most recent update, the company recorded a rise in revenue of 9% and an increase in adjusted operating profit of 15%. Much of this growth was due to the company’s current strategy, which is well-established and has focused on improving the operating margin. It increased by 30 basis points to 4.2% in the most recent half year results, which means the company is on target to meet its target of 4.5% for the year.

Strong top and bottom-line growth means that Renew’s dividend growth is also relatively high. Dividends per share moved 13% higher in the first half of the year, while in the next two years they are due to rise at a similar pace. This puts the company’s shares on a forward dividend yield of 2.3% and since shareholder payouts are covered three times by profit, there could be more double-digit growth ahead.

With a price-to-earnings growth (PEG) ratio of 0.8, Renew seems to offer growth at a reasonable price. Therefore, while the outlook for the UK economy may be somewhat uncertain at the present time, in the long run its share price rise could be impressive.

All-round opportunity

Also offering a potent mixture of growth, value and income appeal is construction and regeneration company Morgan Sindall (LSE: MGNS). It is expected to record a rise in earnings of 14% in the current year, followed by further growth of 10% next year. This puts it on a PEG ratio of only 1.1, which suggests that more capital gains could be on the cards after the 65% rise recorded since the start of the year.

As well as growth appeal, Morgan Sindall may also be a worthwhile holding for income investors. It has a dividend yield of 3.2%, and since dividends are covered 2.4 times, they could realistically rise rapidly in future years. In fact, it would be unsurprising for Morgan Sindall’s dividend growth rate to beat inflation as a result of its forecast for high net profit rises and relatively low payout ratio.

As such, with share prices being high and inflation also rising, Morgan Sindall could be the right stock to own over the long run for both capital growth and income investors

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The FTSE 100 play has seen its share value detonate 23% during the past three months, hitting record tops of £43 per share in the process just this week. And while the stock may have dipped on Friday following latest trading details, this represents nothing more than light profit booking in my opinion.

Intertek announced that group revenues during January-April clocked in at £883.5m, up 14.2% or 1.8% at constant exchange rates.

Chief executive André Lacroix commented that this solid revenues growth was “driven by solid organic growth of 0.9% and a good performance of the acquisitions we made in attractive growth and margin sectors.”

“We are on track to deliver our 2017 targets of solid organic revenue growth at constant rates, with moderate margin expansion and strong cash conversion,” he added.

At its core Products division (responsible for around 60% of group sales), Intertek saw organic revenues at constant rates tick 5.8% higher. Elsewhere, sales at its Trade arm rose by 5%, although the top line at Resources ducked 15.4% as difficulties in the oil and gas sector continued.

Testing titan

Today’s statement underlined the steady progress being made at Intertek’s earnings-driving operations, with organic sales at the Products division speeding up from the 5.5% advance reported in 2016.

And the quality assurance industry (which Intertek currently values at some $250m) offers plenty of growth opportunities as rising global trade, investment and regulation drives demand for its testing, inspection and certifications services.

City analysts also expect earnings to keep climbing at the London firm, at least in the medium term. A 9% advance is marked in for 2017, and an extra 7% rise is anticipated for 2018.

A subsequent forward P/E ratio of 23.1 times may tip above the British blue-chip average of 15 times, but I reckon Intertek’s excellent opportunities are worthy of this premium.

Build a fortune

Morgan Sindall Group (LSE: MGNS) is another London stock that has whooshed higher in recent times, extending the advance that started last summer to rise 27% in value over the past three months.

Indeed, the construction colossus rose to record tops (of £12.50 per share) earlier in May, with investor appetite reinforced by its recent statement that “trading for the financial year to date has been strong, with the positive momentum entering the year continuing throughout the period.” Also the business noted that its committed order book was up 5% as of March from the end of 2016, at £3.83bn.

The company now expects full-year results to be “slightly ahead” of estimates made in February, and I expect Morgan Sindall to keep making progress thanks to the robustness of its end markets. And my view is shared by the City, which predicts earnings to rise 10% and 12% in 2017 and 2018 respectively.

Morgan Sindall still offers excellent value despite its recent share price ascent. Not only does the company deal on a forward P/E ratio of just 13.3 times, but a chunky 3.3% dividend yield offers an added sweetener. I reckon the business is a stunning pick at current prices.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Of course, there will always be times when the value of an investment falls. But if you own shares of good companies, you can hold onto your stock without worrying about losses, confident that better days will come. Today I’m going to look at two companies I believe have the financial strength and growth potential required for successful, low-risk investments.

The best company you’ve never heard of?

Engineering and technology firm Smiths Group (LSE: SMIN) operates in a mix of sectors, including medical technology, airport security and the energy industry.

The diversity helps to protect its profits from slumps in any single sector. For example, while oil-focused engineering businesses saw their profits collapse last year, Smiths’ headline operating profit fell by just 4% as a result of the oil market slump. Profit margins in the group’s other divisions improved and net debt fell, enabling the group to fund a 2.4% dividend increase.

Its other big attraction is its financial strength. The group is highly profitable, with an operating margin of 17% and a return on capital employed (ROCE) of 16%. These figures are supported by low debt levels and strong free cash flow. This combination provides solid backing for the dividend, and allows the group to make acquisitions without taking on too much financial risk.

Smiths’ shares currently trade on a forecast P/E of 17, with a prospective yield of 2.7%. This may not seem cheap, but it’s worth noting that the group’s has risen by 60% over the last five years. That’s more than double the 28% return delivered by the FTSE 100 over the same period. I believe this is a quality business that’s unlikely to disappoint investors.

The boss owns 10%

Companies that are run by executives with significant shareholdings can often make good investments.

An example of this is construction and infrastructure group Morgan Sindall Group (LSE: MGNS). Chief executive John Morgan has a 10% stake in this £468m business and has served on the board since 1994.

Morgan Sindall’s order book rose by 29% to £3.6bn last year, while adjusted pre-tax profit rose by 32% to £45.3m. 2017 is expected to be another strong year — the group recently advised investors that this year’s results should be “slightly above our previous expectations”.

Based on this guidance, analysts’ consensus forecasts suggest Morgan Sindall will generate earnings of 91.7p per share this year, a 13% increase on 2016. The group’s dividend is expected to rise by 12% to 39p. These figures give the stock a forecast P/E of 11.5 and a prospective yield of 3.7%.

That looks an attractive valuation to me, especially as Morgan Sindall’s finances are much stronger than those of some peers. The group reported average daily net cash of £25m last year. Most of the firm’s big rivals run a negative cash balance, so this is a very respectable result that gives me confidence in Morgan’s ability to maintain its attractive dividend.

Morgan Sindall shares have risen by 416% since 1999, more than three times the 126% gain delivered by the FTSE SmallCap index over the same period. I believe shareholders should remain confident.

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Roland Head owns shares of Morgan Sindall. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Trading well

City analysts following the firm expect earnings per share to improve by around 12% during 2017 and by 11% in 2018. The company’s share price has been range-bound for years, but reading the indicators, I reckon that situation may be about to change.

A string of recent contract wins is driving the order book higher and traction in the firm’s operating performance is delivering a strong cash performance. Cash inflow comfortably supports profits and the outlook seems rosy.

Morgan Sindall today sports a raft of indicators suggesting a quality operation. For example, debt seems under control with the cash on the firm’s balance sheet more than covering borrowings. And the firm’s return on capital employed runs almost to double figures, which is impressive for a company operating in the construction and infrastructure sector.

Modest valuation

Spotting an improving business before the wider market catches on can be a great tactic. Valuation re-ratings can really drive total return outcomes for investors. The good news with  Morgan Sindall is that the stock really doesn’t look overvalued just now. In fact, given the robust characteristics I’ve outlined here, I think the shares are cheap.

At today’s 853p share price, Morgan Sindall trades on a forward price-to-earnings (P/E) rating of just below 10 for 2017 and the forward dividend yield runs at 4.4%. With a low valuation like that and a share price that looks like it’s in an uptrend, I think there is a lot to like about the stock.

Meanwhile, tabletop war gaming specialist Games Workshop Group (LSE: GAW) has seen its shares lift more than 50% higher since November. Needless to say, recent trading has been buoyant, with the firm’s chief executive saying in January at the interim results stage: “We are pleased to report sales and profit growth in the period across all channels.”

Undeniable quality

With a return on capital running over 40% and a juicy profit operating margin just above 18%, there’s undeniable quality apparent in the firm’s operations. Over recent periods, cash inflow seems rock solid and more than covers earnings year after year.

Games Workshop occupies a lucrative trading niche in the market, judging by the numbers, seemingly little affected by today’s mainstream migration to digital gaming channels. Yet even now the firm’s valuation doesn’t induce a nose bleed as we perhaps might expect.

At today’s share price around 857p, the forward P/E ratio sits at just over 13 for the year to May 2019 and the dividend yield is around 5.8%. I reckon the firm is worth holding for the defensive-looking cash-backed dividend alone and recent strong share-price momentum is a bonus that could go on to deliver more in total returns for investors.

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Kevin Godbold owns shares in Games Workshop Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

BBA Aviation enjoyed a 12% revenues surge during January-June, to $1.23bn. This propelled underlying pre-tax profit 51% higher from the corresponding 2015 period, to $119.4m.

On top of this, the FTSE 250 firm advised that last year’s game-changing acquisition of Landmark Aviation was “proceeding well and synergy delivery [is] ahead of plan.” And BBA Aviation’s critical Flight Support division continues to perform admirably in a flat market, with organic revenues here rising 3.6% in the first half.

Today’s share price rise leaves BBA Aviation on a slightly-heady forward P/E rating of 17.3 times. But I believe the flying ace’s rising dominance in the corporate jet servicing sector merits this slight premium. And a chunky dividend yield of 3.7% takes the edge off.

A mixed bag

WS Atkins (LSE: ATK) has paused for breath following recent strength, the firm’s share price striking six-month peaks in the lead-up to today’s financial update.

WS Atkins advised that it had “traded in line with expectations through the first quarter,” adding that “we remain confident for the year ahead, despite continued uncertainty in some of our markets.”

The design, engineering and project management consultant has made a “good start” in its UK and European markets, with no immediate impact being felt from the result of the EU referendum. WS Atkins has also performed well in North America since April, it advised, although conditions remain “challenging” in the Middle East and at its Energy division.

WS Atkins deals on a very decent P/E ratio of 11.9 times for 2016 at current share prices, suggesting that the troubles facing the oil and gas segment — combined with the problems potentially thrown up by Brexit — are priced-in at current levels. I for one would be happy to sit on the sidelines for the time being however, given the uncertainty facing some of its end markets.

Construction conundrum

Morgan Sindall’s (LSE: MGNS) share price has fallen off the proverbial cliff since the start of June, a worsening outlook for the construction sector sending the stock almost 25% lower.

Still, a reassuring half-year update on Tuesday has provided investors with much-needed cheer, the stock last dealing 6% higher from Monday’s close.

Morgan Sindall saw revenues decline fractionally between January and June, to £1.15bn. But adjusted pre-tax profit leapt 21% during the period, to £16.1m, the company reporting a “continued recovery” in its Construction & Infrastructure business.

But like WS Atkins, Morgan Sindall warned of long-term uncertainty created by Britain’s decision to leave the EU. And latest construction PMI data suggests that fresh turmoil could be just around the corner — data today showed building activity contracting at its fastest past since 2009 in July.

Morgan Sindall certainly provides decent value for money on paper, the firm dealing on a P/E multiple of just 8.1 times for 2016. The firm also carries a market-busting yield of 5.3%

Regardless, I reckon the rapidly-deteriorating state of Britain’s construction segment makes Morgan Sindall a risk too far at present.

The post Should you buy Tuesday’s ‘hidden’ heroes after their updates? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.