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Shares in support services firm Mitie Group(LSE: MTO) have been on a precipitous downward slide since last summer, which is hardly surprising after fellow outsourcer Carillion went to the wall, crushed under escalating debts.

Mitie has its own debt issues too, and there are still fears in some quarters of further costs set to show up as the company's new management continues with its balance sheet cleanup operation. My Foolish colleague G A Chester was rather prescient when he tipped the shares to fall further in November when they were priced at 202p, and since then they've dropped to 155p as I write. But that includes a recent uptick, and I see signs that Mitie is past the worst.

An update Friday told us that debt is "comfortably" within banking covenants, though I want to see its actual level when full-year results are out in June. At the interim stage at 30 September, the figure stood at £172.6m, and I hope it's come down since then.

The worst over?

Sales growth is modest, and operating profit is in line with expectations. Cash generation has suffered as, among other things, Mitie gets back to a more conservative approach to invoice discounting and 'normalisation' of the balance sheet.

Chief executive Phil Bentley said: "We are one year into our transformation programme and we are making progress." But is it too soon to be confident?

There's risk, but with forecasts of EPS growth returning for the 2018/19 year, which would drop the P/E to around nine, I think the fear is largely in the share price. Yet I want to see those full-year figures first.

Energy woes

Lamprell(LSE: LAM) shares have been sliding for the past few years as the oil price crisis has hit, and were further hammered by a profit warning in September which went on to suggest that the outlook for 2018 was poor too. But with the price all the way down to 78p at the time of writing, are we now looking at a profitable recovery candidate?

We heard Friday that the firm's joint venture in Saudi Arabia has cleared all initial hurdles and is set to formally commence business. Lamprell is expected to contribute up to $140m to the project's construction, with the expectation of an order for 20 jackup rigs over the next 10 years.

Results for 2017, due on 22 March, are set to show a "significant loss" from the firm's East Anglia One wind farm project, and analysts are expecting a fairly hefty loss per share of nearly 16p. Losses are forecast to continue until 2019, though the predicted loss of only 1.3p per share that year suggests Lamprell could be back to profit by 2020.

Buy?

Will Lamprell make it? I see reasons for optimism. It seems to have plenty of cash to see it through this tough period, and expects to have year-end net cash of $255m on the books. And though revenue for 2017 is expected to be around the $370m level, at least the year will fully account for the East Anglia project loss.

Assuming the company can beef up its order book, which is a key focus right now, I'm cautiously optimistic -- and I see the Saudi project as evidence of a better long-term outlook.

Buy-And-Hold Investing

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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