Questor share tip: Weir has fallen too far

The share price slump of almost a quarter in Weir Group shares at the height of recent doom was completely overdone. Now is a good time to buy this high-quality group at a bargain basement price.

Weir Group
£17.35 +32p
Questor says BUY

Questor is not the only market commentator with this view. Yesterday, Goldman Sachs added the shares to its European conviction buy list, arguing that the situation had created a "compelling entry point". A similar view came from UBS.

Questor has recently retipped the shares – before the recent market slump. Investors who did not get in then should certainly consider making an investment or adding to holdings now.

Weir is an engineering group that makes specialist equipment and pumps for the mining, energy and oil sector. All of these industries will see a significant amount of capital expenditure in the next few years.

The reason Questor likes the shares is the company's aftermarket. The group's installed base is growing and it has a solid order book to give it visibility.

The shares are trading on a December 2011 earnings multiple of 14, falling to 12.5 next year. The prospective yield is 1.8pc, but this is a story about growth.

The shares are up 57pc since they were recommended by Questor on June 17 last year at £11.02, compared with a FTSE 100 down by 5pc. However, they were also recommended as a buy recently at £20.72. The shares went on to hit £22.18 after that recommendation, but the recent debt fright has dragged this company down too.

Questor says buy.