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Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Sunday share tips: Mitie, Costain

(Sharecast News) - The Financial Mail on Sunday's Midas column tipped shares of Mitie to its readers, highlighting it shift from facilities management to facilities transformation. To back up her call she pointed to "plenty of experts" who argued the shares still had room to rise, notwithstanding their recent gains.

Midas also judged the shares to be "relatively cheap" on most valuation metrics.

That was on top of the shares' roughly 3% dividend yield.

"There is potential good news in the pipeline. Mitie has made several acquisitions which could add more earnings to the pot, while share buybacks could push its valuation higher," said Midas.

"[...] Most analysts expect them to rise to over 140p. Buy."

The Sunday Times's Lucy Tobin judged construction and engineering group Costain's shares to be a 'buy.

Yes, the outfit was "vulnerable to "the ebbs and flows of contract-awarding mandarins," she said.

But over four-fifths of its sales for the current year had already been booked and according to its boss, Alex Vaughan, the value of that was nearly three times 2023's earnings.

The company had also "dramatically" cut its pension fund contributions.

Furthermore, the shares were trading on just five times earnings for 2024.

There was also a relatively small difference between its £164m of net cash on hand and its £217m market capitalisation.

Tobin said that was proof of the shares' good value.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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