- Construction related shares price in a lot of risks
- Organic growth important to reassure a value investing case
Shares in construction or construction-related businesses don’t tend to command high stock market valuations. This is because their revenues and profits tend to be very volatile. They are strong when the economy is doing well, but weak when the economy is heading down.
Investors prefer stable and consistent levels of profitability and will pay higher multiples of earnings for businesses that have these characteristics – especially if they have decent long-term growth prospects.
