The Kier share price has almost doubled in a month. Time to buy?

G A Chester discusses the soaring Kier share price, and another stock showing distinct signs of revival.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Kier (LSE: KIE) and Jupiter Fund Management (LSE: JUP) are two stocks that have slumped over the last couple of years. However, more recently, they’ve shown distinct signs of revival.

Kier’s share price has almost doubled in little more than a month. It closed yesterday at near 150p. Jupiter’s recovery hasn’t been as spectacular, but a rise of as much as 10% during yesterday’s trading, and a close at 411p, showed the market further warming to the company’s prospects.

Despite the recent gains, both stocks remain way below their previous highs. Could now be the perfect time to snap up shares in these two businesses?

Should you invest £1,000 in Flowtech Fluidpower Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Flowtech Fluidpower Plc made the list?

See the 6 stocks

A good deal

The positive trading in Jupiter’s shares yesterday followed news of its proposed acquisition of Merian Global Investors. The acquisition of Merian’s £22.4bn of assets under management (AUM) will take Jupiter’s total AUM to £65.2bn. The upfront consideration of £370m  will be paid through the issue of new Jupiter shares.

In an article earlier this month, I argued Jupiter was overvalued compared with asset management giant Schroders. My valuation acid test in this sector is to avoid stocks valued at above 3% of AUM. At the time, Jupiter was trading at 4%, compared to Schroders at 1.9%.

In acquiring Merian’s £22.4bn of AUM for £370m, Jupiter’s paying 1.7%. As such, this looks a good deal for Jupiter. But how does the valuation of the enlarged group stack up?

Acid test and dividend

According to my sums, we’re looking at a market valuation of £2.3bn against AUM of £65.2bn. The valuation represents 3.5% of AUM, meaning Jupiter remains in overvalued territory on my acid test. As such, I’d avoid the stock at the current price.

It’s also worth noting when I looked at it earlier this month, Jupiter was yielding 6.3% on a City forecast dividend of 24.4p a share (consisting of a 17.1p ordinary and 7.3p special). In yesterday’s acquisition announcement, the company said it won’t be paying a special dividend this year. With just the 17.1p ordinary, the prospective yield drops to 4.2%.

Positive news flow

Construction and infrastructure services firm Kier endured “a difficult year, resulting in a disappointing financial performance” in its last financial year ended 30 June. However, since it released those results in September, there’s been positive news flow.

In a trading update in January, the company said it continues to win new work. It also said it continues to make “good progress” on reshaping its business, with office closures, the outsourcing of certain functions, and a big reduction in headcount. Subsequently, the shares soared, following Boris Johnson’s decision to press ahead with the controversial HS2 rail project.

Debt

Despite the rise, the stock still carries a bargain-basement earnings rating. It’s trading at less than 3.5 times analysts’ 44p-a-share earnings forecast for the current year to 30 June.

However, debt and the state of the company’s balance sheet remain a big concern for me, as they do for a number of my Motley Fool colleagues. The firm has spoken of continuing to manage its net debt in trading updates since September. However, it’s given no hard numbers.

We’ll know more when we get Kier’s interim results on 5 March (brought forward two weeks from their original scheduled date). For the time being, I’m continuing to avoid the stock.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Schroders (Non-Voting). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

FTSE shares: how £500 a month could put investors on the path to becoming millionaires

By consistently investing in FTSE shares, investors can accelerate their journey to millionaire status even if they only have £500…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

£10 a day invested in cheap LSE shares could unlock a second income of £27,125 a year!

Believe it or not, investing just £10 a day can potentially unlock high returns and an attractive passive income stream…

Read more »

Young Asian woman holding a cup of takeaway coffee and folders containing paperwork, on her way into the office
Investing Articles

Down 90%, is this growth stock finally worth buying in July?

This burgeoning robotics growth stock's been struggling with mounting losses, but could that soon be about to change? Zaven Boyrazian…

Read more »

Black woman using smartphone at home, watching stock charts.
Investing Articles

Could the Lloyds share price come crashing down?

In 2025, the Lloyds share price has hit heights not seen for a decade. Dr James Fox explores where the…

Read more »

Portrait of pensive bearded senior looking on screen of laptop sitting at table with coffee cup.
Investing Articles

Income shares: how much do I need to invest to earn £500 a month?

With a monthly passive income goal of £500, Zaven Boyrazian breaks down how much he thinks investors need to put…

Read more »

Modern apartments on both side of river Irwell passing through Manchester city centre, UK.
Investing Articles

2 overlooked UK shares to consider for dividends

Paul Summers looks beyond the usual suspects from the FTSE 100 and highlights two under-the-radar UK shares offering great passive…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

Prediction: in 12 months the hated Ocado share price could turn £10,000 into…

Harvey Jones is desperate for some good news about the beleaguered Ocado share price, and he finally appears to have…

Read more »

A young Asian woman holding up her index finger
Investing Articles

Up 132% in 2025! Is this one of the best growth shares to buy today?

Looking for the best shares to buy now? This soaring mining enterprise has dominated in 2025, beating the FTSE 100…

Read more »