CML Microsystems and Costain Group continue to put on an excellent performance, with both having corporate events shortly

01.08.2025

Less than a month ago, on Tuesday 8^th July, I featured both the Costain Group and CML Microsystems, as offering big upside.

So, it is easy for me to come back and view their progress over the last month.

Edging ever higher

CML Microsystems (LON:CML) were then 265p, since when they peaked at 330p a week later, and have subsequently been trading in the 305p to 315p price range.

Now at 309p I see the shares moving ahead, hopefully helped by a positive Trading Update issued before its AGM next Tuesday, 5^th August.

CML develops mixed-signal, RF and microwave semiconductors for global communications markets.

The group utilises a combination of outsourced manufacturing and in-house testing with trading operations in the UK, Asia and USA.

CML targets sub-segments within Communication markets with strong growth profiles and high barriers to entry.

It has secured a diverse, blue chip customer base, including some of the world's leading commercial and industrial product manufacturers.

Growth in its end-markets is being driven by factors such as the appetite for data to be transmitted faster and more securely, the upgrading of telecoms infrastructure around the world and the growing prevalence of private commercial wireless networks for voice and/or data communications linked to the industrial internet of things.

CEO Chris Gurry stated with the group’s recent Finals that:

"With the successful completion of the operational phase of a multi-year transformational strategy, the business is now poised to enter a new chapter focused on sustainable growth and long-term value creation.

Over this period, we have fundamentally reshaped the business, enhancing efficiency, expanding our technology capabilities, and significantly broadening our product portfolio.

Supported by a strong financial foundation and a disciplined growth strategy, we are well-equipped to navigate current challenges and intend to continue investing in innovation, customer engagement, and strategic partnerships that will drive the business forward."

In the middle of last month, the group announced that it has agreed the sale of excess land at its headquarters in Maldon, Essex.

The disposal, which comprises non-operational land identified as surplus to requirements, is expected to generate total cash proceeds of £7m, which will be received in two tranches over the course of the current financial year, being £4m with immediate effect and the balance of £3m during March 2026.

That will certainly strengthen CML’s balance sheet and provide it with extra ability to chase suitable growth opportunities.

Upon the issue next Tuesday of the AGM Trading Update, it is possible that Shore Capital Markets analyst Martin O’Sullivan might publish his latest profit estimates going forward for the next couple of years.

In the meantime, even though my mid-June Target Price of 290p has been achieved, I strongly feel that the shares should be held tightly within your portfolios.

(Profile 19.06.25 @ 235p set a Target Price of 290p*)

Building up the infrastructure

I look forward to a confident Trading statement when the Costain Group (LON-COST) reports its Interim Results on Wednesday 20^th August.

Since the middle of April this group’s shares have enjoyed a 64% rise in price and at 164p they are within a whisker of the recently upgraded Target Price of 170p fixed by Panmure Liberum analysts Joe Brent and Joe Walker.

They increased that in mid-June upon the group having issued yet another confident Trading Update.

The analysts look for the current year to end-December, to show sales at £1,260m (£1,251m) and pre-tax profits of £52.0m (£48.5m), maintaining earnings at 14.4p (14.4p) and paying a dividend of 2.5p (2.4p) per share.

For 2026 they see £1,275m revenues, £56.4m profits, 15.9p earnings and a 2.9p dividend.

Some £1,413m of turnover in 2027 could show £63.0m profits, 17.7p earnings and with a 3.2p dividend per share.

It now has a massive £5.4bn Order Book plus end-year net cash positions expected to be around £148m – which compares very well with its £440m market capitalisation.

This remains one of my favourite stocks to follow, it really has so much going for it still – its shares at 164p are still undervalued and should be a portfolio stalwart.

(Profile 05.09.19 @ 155p set a Target Price of 250p)

(Profile 02.08.21 @ 55p set a Target Price of 69p*)

(Profile 24.08.23 @ 50p set a Target Price of 62p*)

Asterisks * denote that Target Prices have been achieved since Profile publication.