Galliford share price could double to 85p

Galliford Try stock is too cheap to ignore says Alistair Dawber in his investment column in today’s issue of The Independent.

Galliford’s shares currently trade at 46p.

Dawber notes: “Galliford Try has spent the past 12 months reminding investors that more than 90% of its business comes from public-sector construction work, just as the market for its other arm, housebuilding, has struggled.

“We last looked at the company in January, when the shares traded at 35p.

“At that point, many of the analysts said the shares were cheap, but some warned that the stock would tread water during the recession. Those in the latter group may not have anticipated the recent share price rises.

Dawber supports the argument that Galliford’s shares are still undervalued and reckons that the group’s construction and social housing businesses alone, and even if valued on “an aggressively low price-earnings ratio”, are worth more than 50p.

Next, he adds in Galliford’s infrastructure operations, arguing that as they are at a cyclical low they meriting a “recovery rating,”

That move takes the theoretical share value to more than 60p.

Still to come is the further valuation of the private housing enterprise which “is looking increasingly interesting and, even as the cycle still turns down, it adds some 22p to the above numbers.”

Well, well… that’s got the tally to 85p.

“The stock is cheap and at these levels is worth a bet,” he concludes.