Mining firm unearths opportunities
The fact that Western Stock Exchanges are, at least as measured by somewhat unrepresentative indices, trading towards four or five-year peaks it is all the more remarkable when one bears in mind that mining stocks, which represent a pretty hefty proportion of the FTSE 100 Index, have been in the doldrums for the past 18 months or so, reflecting weak commodity prices.
As a result, one needs to interrogate the investment prospects of any proposition to ensure that the current rating is not erring on the side of generosity. Nevertheless, for the patient, there do appear to be opportunities, of which Keller is a case in point.
Keller is a specialist ground engineer whose services are used across the construction sector in industrial, residential and environmental projects. It has an international profile with operations in North America, Australia, Europe, the Middle East, and Africa, as well as Asia. Its services include piling and earth retention, speciality grouting, ground improvement all essential, if rather, on the face of it, dull operations.
Nevertheless, Keller is an important link in the reconstruction “food” chain and with its core markets in the US, for example, doing particularly well I have been rather surprised by the response to the group’s results, which were published in early March.
Since then, the shares have struggled, falling back from £12 to less than £10 for no particular reason that I can identify. True, the strength in sterling is not helping and its operations in Australia, for example, in particular will undoubtedly be adversely affected by foreign exchange considerations.
Furthermore, although the recent share price performance has been pretty uninspiring, the group has progressed appreciably since early 2011, from the 250p level it hit in November 2011 when the global construction industry was in near total recession.
Unless I have overlooked something which explains the recent setback in the share price, I think all we are seeing is some opportunistic profit taking by longer term shareholders and once this has run its course Keller’s stock price could bounce back.
Bryan Johnston is a director at Brewin Dolphin in Edinburgh
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