Daily Mail share tips: Workspace and Keller
Shares analysis from the Daily Mail's City team. The spotlight falls on London small business landlord Workspace and upbeat ground engineer Keller
Workspace
VITAL STATISTICS (first quarter)
Net asset value per share: 354p (+4%)
One-year share performance: -4%
Investing in landlord Workspace is a bet on London prosperity.
It buys dilapidated buildings in the capital - often leftovers from historic industry such as old leather markets - and turns them into trading centres for small, creative businesses. Tenants include fashion and furniture designers and costumiers.
When Londoners feel prosperous they buy trinkets and visit the theatre, boosting the number of creative entrepreneurs and enabling Workspace to hike rents.
That means the current economic uncertainty is bad news. But Workspace is a highly-regarded landlord and developer and number one in its niche.
For five years, its shares have often traded above the value of its properties. Now they are hovering at a 10% discount to forecast net asset value - what the properties are expected to be worth per share next March.
Property stocks have slumped but real estate should be part of a balanced portfolio. The City is feeling nervous but London should get richer over time and Workspace looks cheap.
VERDICT: Buy
Keller
VITAL STATISTICS (interims)
Pre-tax profit: £40m (+20%)
Dividend: 6p (+42%)
One-year share performance: +38%
The ground engineer, or muck scraper, gave a confident half-year update. Keller says annual profits would be 'significantly' above last year's. Shares in the group eased 19p at 899p, trailing July's record of 1,135p, on concerns about Keller's position in the US, where the housing market is suffering from oversupply.
These fears appear misplaced as 80% of the group's business in the US comes from the buoyant commercial and public infrastructure markets. That leaves only a fifth of Keller's US activity exposed to the stricken residential market. A strong first-half performance, and positive outlook, prompted an upgrade from Citigroup from 'hold' to 'buy'.
Keller's prospects are built on solid foundations. The shares look cheap at less than 11 times 2007 estimated earnings.
VERDICT: Buy
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