Amec added to The Share Centre's ‘buy' list

Nick Raynor, investment research analyst from The Share Centre, explains why consulting, engineering and project management services company, Amec, has been added to our ‘buy' list.

"Although Amec is classified as an oil equipment company, it provides a service to many different sectors including nuclear, minerals and metals, renewables, bioprocess, power, and water solutions.

"Top contractors in the sector include the US Government and military establishments and the UK Government, who are reportedly due to invest £73bn in projects such as nuclear clean up operations. There are many quality companies within the sector and although Amec does not stand to win all of these contracts, its current relationships and operations mean the company is a good contender.

"Investors will be pleased to see Amec has no current debt and is standing on an enviable net cash position of £430m. A number of acquisitions have taken place during the year, all of which are being integrated successfully.

"Competition and cuts in Government spending remain a concern for Amec, however the company's strengths are in its diversity and global exposure. Amec's PE level is currently below the sector average. However, it is a solid business with a strong order book and high demand for its services. We believe a premium is deserved and have therefore upgraded our recommendation to a ‘buy' for medium risk investors.

"There looks to be plenty of potential for the share price to increase in the longer term and the yield is now over 3% and continuing to rise. Amec could provide a balanced return for investors."