UK capital goods firms most attractive for three years, says Credit Suisse
British capital goods companies are a more attractive investment opportunity than they have been for the last three years, according to Credit Suisse.
The UK capital goods sector ranks fourth globally with only Singapore, the Philippines and the US offering a more attractive valuation spread for industrial stocks, the Swiss broker said.
Credit Suisse said high operating margins were responsible for the resurgent appeal of companies in the sector, which are involved in areas such as engineering, defence, aerospace, automotive, energy and safety technology.
The broker said companies most undervalued against their peer groups included automotive group GKN, measurement technology firm Spectris, aerospace parts manufacturer Senior and advanced materials group Morgan.
Companies trading at the largest premium to their peer group include precision measurement group Renishaw, electronics firm Laird, oil services company Weir and valve and meter supplier Spirax Sarco.
Credit Suisse said its key picks were safety technology group Halma, Spectris, Senior, GKN and specialist heat treatment group Bodycote, while Laird and steel industry services group Vesuvius were less in favour.