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MIDAS SHARE TIPS UPDATE: Morgan Sindall has secure workload

John Morgan is 65, an age at which many wealthy entrepreneurs start to think about retirement. Not Morgan. Still at the helm of Morgan Sindall, the construction group he founded in 1977, he shows little sign of slowing down. 

Last week, Morgan told investors that results for 2021 were likely to be significantly ahead of expectations – the group's third upgrade this year. Interim figures are out on Wednesday, but the firm has revealed that pre-tax profit will be around £53million, some 46 per cent ahead of the comparable period in 2019, before Covid struck. 

There is plenty of cash on the balance sheet and the firm has a secure workload valued at more than £8billion. 

Brokers now expect that annual profits will almost double to £121million, while some analysts have pencilled in a near-40 per cent rise in this year's dividend to 85p. 

Busy workload: Morgan Sindall consists of five divisions, ranging from long-term inner-city regeneration to half-day jobs

Some of the success reflects a rebound, following a tough start to 2020 but, as Morgan highlights, the business is doing well even compared to 2019. Encouragingly too, much of the strong performance stems from the company's particular culture and approach. 

Morgan Sindall consists of five divisions, ranging from long-term inner-city regeneration to half-day jobs, such as repairing electrics at housing association properties. Straightforward construction is in there too, alongside big infrastructure projects, such as the Tideway Super Sewer in London and office and retail refits. 

Thousands of jobs are completed each year. Morgan Sindall prides itself on paying subcontractors more promptly than rivals and on always trying to find better ways of working (such as creating a phone app that allows customers to track when a workman is coming to deal with a repair at their home). 

This focus on fair deals for suppliers and clever deals for customers has helped Morgan Sindall to increase its market share steadily over the past few years – a trend the group expects to continue as the economy recovers. 

Midas recommended Morgan Sindall in 2017 when the shares were £14.10. When we looked at the firm again, it was February 2020, pandemic jitters had already started and the stock had just fallen by 10 per cent to £17.54. 

Last week, they closed at £23.40, with many followers expecting the price to move even higher over the next few months and beyond. 

The group pays a decent dividend too, putting the stock on a yield of 3.6 per cent.

Midas verdict: At £23.40, Morgan Sindall shares have soared by 66 per cent in the past four years and are likely to trend higher in the months and years ahead. The business is well run and operating in an industry that is expected to continue expanding as the pandemic recedes. A strong hold. 

Traded on: Main market Ticker: MGNS Contact: morgansindall.com or 020 7307 9200 

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