Even though the share price of Intertek Group(LSE: ITRK) has ripped higher recently, I believe the tester still offers plenty of upside at the moment.
The FTSE 100 play has seen its share value detonate 23% during the past three months, hitting record tops of £43 per share in the process just this week. And while the stock may have dipped on Friday following latest trading details, this represents nothing more than light profit booking in my opinion.
Intertek announced that group revenues during January-April clocked in at £883.5m, up 14.2% or 1.8% at constant exchange rates.
Chief executive André Lacroix commented that this solid revenues growth was "driven by solid organic growth of 0.9% and a good performance of the acquisitions we made in attractive growth and margin sectors."
"We are on track to deliver our 2017 targets of solid organic revenue growth at constant rates, with moderate margin expansion and strong cash conversion," he added.
At its core Products division (responsible for around 60% of group sales), Intertek saw organic revenues at constant rates tick 5.8% higher. Elsewhere, sales at its Trade arm rose by 5%, although the top line at Resources ducked 15.4% as difficulties in the oil and gas sector continued.
Today's statement underlined the steady progress being made at Intertek's earnings-driving operations, with organic sales at the Products division speeding up from the 5.5% advance reported in 2016.
And the quality assurance industry (which Intertek currently values at some $250m) offers plenty of growth opportunities as rising global trade, investment and regulation drives demand for its testing, inspection and certifications services.
City analysts also expect earnings to keep climbing at the London firm, at least in the medium term. A 9% advance is marked in for 2017, and an extra 7% rise is anticipated for 2018.
A subsequent forward P/E ratio of 23.1 times may tip above the British blue-chip average of 15 times, but I reckon Intertek's excellent opportunities are worthy of this premium.
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Morgan Sindall Group (LSE: MGNS) is another London stock that has whooshed higher in recent times, extending the advance that started last summer to rise 27% in value over the past three months.
Indeed, the construction colossus rose to record tops (of £12.50 per share) earlier in May, with investor appetite reinforced by its recent statement that "trading for the financial year to date has been strong, with the positive momentum entering the year continuing throughout the period." Also the business noted that its committed order book was up 5% as of March from the end of 2016, at £3.83bn.
The company now expects full-year results to be "slightly ahead" of estimates made in February, and I expect Morgan Sindall to keep making progress thanks to the robustness of its end markets. And my view is shared by the City, which predicts earnings to rise 10% and 12% in 2017 and 2018 respectively.
Morgan Sindall still offers excellent value despite its recent share price ascent. Not only does the company deal on a forward P/E ratio of just 13.3 times, but a chunky 3.3% dividend yield offers an added sweetener. I reckon the business is a stunning pick at current prices.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.