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Company spotlight: Mitie

FINANCE

MITIE'S growth has been smooth and virtually uninterrupted as the group moves out of more traditional building activities.

It is focusing on areas such as ground maintenance, which clearly has healthy margins judging by the £1.2 million profit made on £6.8 million turnover by Mitie's latest acquisition, Lyndhurst Services.

This margin ? and assets of £2.7 million ? is why Mitie paid £9 million for Lyndhurst.

The sale of its scaffolding arm to its management two years ago for £12 million left Mitie nursing an £8.4 million hit but this has not deterred a following in the City. Of six covering analysts, five are positive and the other neutral.

German investment bank DrKW joined Mitie's growing band of followers last November, initiating coverage of the stock with an 'add' rating and a target price of 184p.

The shares have since motored past that to a record high of almost 200p and the company has a market capitalisation of over £600 million.

Mitie is not turning its back on construction, just picking the areas that provide the least risk and the best return.

For example, a growing exposure to the social housing market ? the latest flavour of the month in the City for construction stocks ? has provided orders of £150 m illion.

With a slightly different financial calendar ? Mitie's year ends in March ? the results season will be gone by the time the full-year figures are out in May but that is not a reason to pass over a solid-looking stock.