MIDAS SHARE TIPS UPDATE: Shares in airline group Meggitt still have a way to fly

MIDAS SHARE TIPS UPDATE: Shares in airline group Meggitt still have a way to fly

Rosie Murray-west for The Mail on Sunday

Cheer on the stock market is perhaps hard to find at the moment, but those who watched Midas in April last year to buy aeronautical group Meggitt for £ 4, 37p have a profit.

The shares closed at £ 4.97 on Friday and many intermediaries believe they should go further. Last week, Goldman Sachs raised its target to £ 6.26p after raising it before Christmas in anticipation of strong growth & # 39;

The Dorset-based company, which has been able to trace its roots for 150 years, has a lot to recommend in turbulent times. The parts it supplies to both civilian and military aircraft are vital for safety. Customers include all major aircraft manufacturers, including Airbus, Boeing and Bombardier.

Hot tip: Meggitt makes parts for military and civil aircraft

If you have recently been on a plane, chances are that Meggitt has been involved in the delivery of single wheels, seals, valves and brakes, while the company's technology also ensures that fuel tanks do not catch fire in the event of a collision. .

Meggitt has the advantage of three different income streams, which helps to stabilize the results if the demand in one area decreases. The defense sector supplies one third of the turnover, while 55 percent comes from commercial aircraft and the rest comes from the energy sector.

As soon as Meggitt has delivered the parts for an aircraft, it is usually involved for many years in maintenance and replacement, thus ensuring the predictability of the revenue. That does not mean that Meggitt has been immune to headwinds.

The company has struggled to cut costs in some divisions, especially those for polymers and composites, and this has attracted shares in recent months.

Chief executive Tony Wood said in August, when the company announced its half-year results, that this turned around. Expect further updates about this next month when the company announces its full figures.

Midas Verdict: With a healthy dividend yield of more than 3 percent on estimated numbers for 2018 and sustained progress in cost savings, it is worth keeping to this level to Meggitt to see if it should continue flying.


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