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Does Switzer think ASX:CIM is a good value stock that will benefit for the huge amounts of government stimulus. Do you think Cimic offers good value and growth around these current prices with potential with a growing dividend?
A: CIMIC Group (CIM) should certainly be a beneficiary of government stimulus spending on infrastructure and building. Others you could consider include AdiBri, Boral, CSR, James Hardie and Brickworks.
A caution with CIM is that it is 71.9% owned by Hochtief (which is a subsidiary of a Spanish group ACS), so minority shareholders have to “go with the flow” and appreciate that their “interests” won’t always be top of mind for the ACS appointed Directors and Management team.
On forecasts, the brokers have a target price of $28.50, about 6.4% upside to today’s price of $26.79. They are forecasting the dividend to rise from a total of 41.4c in CY20 (an effective yield of 1.5%) to 131.3c for CY21 ( a forecast yield of 4.9%).
