Panmure highlights improving newsflow for construction stocks

17th Feb 2015 08:14

Panmure Gordon has maintained an 'overweight' position on UK construction stocks on the back of an improving outlook, as it highlighted SIG as its top pick in the sector."Architects billings growth (ONS data), project awards data (Barbour Index) and construction employment vacancies point to a healthy UK construction market," the broker said in a report on Tuesday.Elsewhere, Panmure said the US market is "firm" but Europe is "weak", though the latter could be an early beneficiary once the European Central Bank kick starts its quantitative easing programme."Across many of the segments self-help is a recurring theme. Disciplined capital allocation and a focus on operational efficiencies is driving returns," Panmure said."We believe this increasing return on invested capital should continue to stimulate investor interest and have an 'overweight' stance on the sector."The broker said SIG is its key 'buy' recommendation for investors, with its 226p target price for the shares implying 20% upside from current prices."News flow highlights the positive trends in the UK [...]; how self-help initiatives are surprising on the upside. Europe is subdued but comps will soften from April/May," Panmure said.The broker also rated Howden Joinery, Marshalls, Travis Perkins and WS Atkins as 'buys'. while RPS is the only stock rated 'sell' on the back of its exposure to the oil industry.