One to Watch: Solid foundations

MORGAN Sindall is a UK-based construction and regeneration company. It has five divisions: construction, infrastructure, affordable housing, fit-out and urban regeneration. The firm's subsidiaries work across the transport, water and energy sectors and are involved in the construction and refurbishing of social and open market affordable housing in the UK. For the year to end-December, Morgan's pre-tax profits fell 28 per cent. Even so, it reported robust demand in its construction division, while infrastructure is also doing well. Morgan shares offer a yield of more than 7 per cent and are on a prospective p/e of less then seven. Its core markets are difficult, but this is a high-quality, well-managed business with an excellent record. The company's performance in the fit-out market has been encouraging in the circumstances, with the value of larger project tenders likely to increase significantly. Construction has a strong order book, if down on the comparable period last year, while the infrastructure division is trading well, supported by major customers in the utility and transport sectors; it recently won an important partnership from the Highways Agency. Morgan is particularly prominent in the area of social housing, and this is unlikely to suffer in even the most austere of central spending budget reviews. Morgan's shares are likely to remain sensitive to the negative sentiment within the building sector for the time being, but might be worth accumulating against the day when the building cycle begins to revive, when I expect the firm to be in the vanguard of the upturn. The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio. Redrow 138.7p -2.3p Broker says HOLD HOUSEBUILDER Redrow is "on the mend" according to RBS Equities, but there is "no quick fix". The broker said: "Redrow's operational turnaround appears firmly under way, although planning issues and delays to new land investment in the first half of 2010 are reminders that the process will take time." BP 604.1p +3.9p Broker says BUY THE tone of oil giant BP's strategy update was more "evolutionary than revolutionary", according to Killik & Co. But Killik head of equities Jonathan Jackson added: "For those investors looking for low-risk exposure to the oil price and an attractive dividend yield, we would recommend BP."