2 Undervalued Industrial Stocks with Dividend Potential

Despite rising profits, these two industrial companies are trading below fair value, say Morningstar equity analysts

Karen Kwok 21 March, 2017 | 10:43AM

Defence and aerospace stocks Babcock International Group (BAB) and Meggitt (MGGT), are both trading at below their fair value estimate according to Morningstar equity analysts.

The latest results from both companies show profits growth – but their share prices have fallen over the past six months thanks to uncertainty raised by the Brexit vote. Defence spending decisions are widely expected to be delayed within the two-year negotiating period between UK and European Union.

However, Archie Bethel, chief executive at Babcock, is reported to have said he expects to benefit from US President Donald Trump’s demand that NATO members spend more on defence, helping the company to avoid the turmoil hitting peers who could potentially win fewer contracts after Brexit.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Babcock International Group PLC363.10 GBX3.51

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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