It’s fair to say the share price of engineering services provider Renew (LSE: RNWH) had been recovering well. Since bottoming in mid-March, it was up about 25% by yesterday.
However, today’s release of the half-year results report has caused the stock to explode higher still. It’s up around 15%, as I write. The great thing is, I’m finding many shares staging fast recoveries right now. And each one is backed by a resilient business trading well through the crisis, or benefitting from the crisis, or both.
Good prospects
It seems Renew could be in the ‘both’ category. It’s trading well now and has operations poised to recover even more. There’s also the potential to win more business because of government policy going forward.
Chairman David Forbes explained in the report that the strong first-half performance reflects the “reliable long-term nature of the UK infrastructure markets.” And, tantalisingly, he said the firm’s strategy in the sector is “reinforced in the Government’s latest Budget when they committed to investing £640bn in infrastructure over the next five years.”
I’ve been bullish on the infrastructure sector for some time. So it’s pleasing for me to see Renew is so embedded in the industry. Forbes reckons the company has been able to carry on with around 80% of its operations after taking the necessary precautions for Covid-19.
Now, the directors are looking for opportunities to get the remaining 20% of operations back up and running following the UK government’s recovery strategy launched on 10 May.
Meanwhile, the first-half figures to 31 March look good. Revenue rose by just over 4% compared to the equivalent period the year before. Adjusted earnings per share also moved just under 5% higher. The directors had previously announced the suspension of the interim dividend, in line with many other firms during the crisis.
Long-term opportunities
Forbes reckons Renew’s position in its markets is strong because of the “essential” nature of the work undertaken. The company is “well placed” to play a significant role in the long-term opportunities that will emerge across UK infrastructure, “a sector that will play an important role in rebuilding our economy.”
I reckon the infrastructure sector is a decent place to invest right now. Share prices are looking perky for many firms involved in the industry. But I’m also seeing strong stock recoveries and improving prospects for companies in sectors such as Healthcare, IT, Software, Betting and Gaming, Fast-Moving Consumer Staples, and others.
Indeed, there are some fertile hunting grounds out there. But there are also some dangerous swamps into which I wouldn’t venture right now. For example, I’d follow Warren Buffett and avoid airline shares. And I’m not keen on risking my hard-earned trying to pick firms that will be survivors in the hospitality sector, such as pubs, restaurants, and hotels.