US Edition Weir Group
£18.60 -71p
Questor says BUY
The specialist pump and valve engineering group said its order book should hit a record by the end of the year, with strength in the oil & gas and mining markets continuing until October. Indeed, order input for the 39 weeks to November 4 is up 21pc on a like-for-like basis.
However, the absence of a material upgrade to full-year expectations looks like it disappointed some. The group said it expected to meet market expectations. The shares have also had a strong run since their nadir at the start of October when they hit £13.75. Indeed, even after yesterday's falls the shares are almost 12pc ahead of when Questor last said buy on September 28.
In mining, Weir is the global leader in slurry handling equipment. This sector is strong. The oil and gas sector is mixed, with pockets of strength and weakness – with its power and industrial unit seeing subdued trading, as orders in this field are especially "lumpy".
The shares are trading on a December 2011 earnings multiple of 14.1, falling to 12.6 next year. The prospective yield is 1.8pc, but this is a story about growth.
The shares are up 69pc since they were recommended by Questor on June 17 last year at £11.02, but have been tipped as high as £20.22. The FTSE 100 is up 6pc since the original tip.
The global structural drivers for Weir's markets are sound and are likely to be in place for some time. Weir's prospects are tied in with development in emerging economies and the need for raw materials and energy to support this.
The shares are likely to be volatile as sentiment swings from "risk on" to "risk off". Buy.