Stocks to watch as Carillion falls.

The company Kier have already taken on more responsibility on the HS2 Project, and have announced that they will see no adverse financial impact from the collapse of Carillion. Over the past year their share price has seen a downward trend.  The price started the year at around 1350p, now down to just under 1000p. Their net profit over the past 5 years has been steady, and with Carillion going under, this leaves one less major competitor and more demand that needs to be fulfilled. Kier was already awarded a £8 billion schools programme, and has begun its takeover of Carillion’s contracts. The group announced in November that it was on track for double digit growth with full year profit jumping 8%. Their current share price sitting at under 1000p sets a nice price point for future share price growth.

Carillion’s recent collapse has left many shell-shocked with fear about ongoing contracts and jobs. Their collapse has also highlighted the extreme levels of competition within the construction and project management industry, with ever-thinning margins. These margins are what ended up cutting Carillion off at the knees, with profitable contracts turning into committed losses. Leaks of excessive executive pay and bonuses have added fuel to the fire after the discovery of Carillion’s potential £900million pension deficit. This saga has forced the government to promise strengthened regulation on pension pots with greater powers to punish directors. So, where does Stockpickers come into all of this? Well, we can see a shining light at the end of the tunnel. The maintenance projects, laid off staff and unfinished construction sites, won’t go abandoned. They exist because the demand is there, and where there is demand, there is money.

Serco is our second choice, and has already been a big winner of Carillion’s down fall. Serco purchased around £90million of Carillion’s healthcare assets, investors believe there could be an opportunity for further acquisitions of these contracts or others. Serco already provides maintenance services such as cleaning and catering for Southampton General Hospital and prison services in Australia. The company was making heavy losses in 2014, and suffered a reputational hit after it was found to be overcharging for its prisoner tagging service. Since then the company has been on a strict recovery with Nicholas Soames at the helm. He has repaired the company’s reputation, cut back on overbearing contracts and costs. We have faith that this company will pick up some leftover contracts, but diligently and sustainably. Their share price is currently around 95p at a near year low, but will hopefully climb on the strong profit projections from December.

The last company is Speedy Hire plc. They recently took a hit from the collapse of their biggest customer Carillion, however the tool hiring has been taking steady steps in the right direction. They announced record profits this year of £11.5million, and recently acquired two ‘Powered Access Specialists’ companies to broaden their rental ability and customer base. The share price currently sits at 56p per share, but has traded as high as 400p in the past. Overall this share took a bit of a shock over the past couple of weeks, however it continual growth and strong results this year give a good indication of what is to hold in the future.

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