Tuesday tips round-up: CRH, RPS Group

3rd Feb 2015 09:00

London-listed building materials group CRH has stepped in to scoop up the assets which rivals Holcim and Lafarge were forced to discard in order to obtain the green light from Brussels for their own merger. The company believes it is purchasing those assets at the bottom of the cycle for its sector and markets seem to agree.The size of the €6.5bn purchase is significant. It is taking on businesses with sales equivalent to 40% of its own - so it is truly transformational. They will turn CRH into the third-largest player in its sector, as it gains exposure to new growth markets such as Brazil and the Philippines.However, that may mean that its activities in the cement market may now come under greater scrutiny from the Competition and Markets Authority. Indeed, the cement plants being bought mean the Irish outfit will be able to source its needs internally. As such, advice from The Times' Tempus column is that "the shares look worth buying for the long term".Consultancy firm RPS Group's year-end trading update revealed an improvement at its energy business during the second half of last year in comparison to the first. That is not surprising as it had been on the slide, as a result of falling oil prices, throughout the first half.That unit is expected to see a small decline but as a whole the company will benefit from the recovery in the American economy and housebuilding in Britain. It is for that reason that RPS has just finalised two bolt-on acquisitions, one of them in North America.For the 21st consecutive time the company has decided on a 15% increase in its dividends, this time for 2014. Hence, the shares are now trading on a yield of almost 4.5%, which should offer a measure of support.Tempus believes the shares are unlikely to progress but the yield is attractive, so they are worth holding for income.