Costain Group PLC (LON: COST) shares rose 4% after Premier Modular, its joint venture with Srabag SE, received multi-million pound contracts to provide project offices and social facilities for 15 Phase I locations of HS2 high-speed rail had received project.
The construction and engineering firm’s share price had fallen for the past seven consecutive days of trading before today’s announcement sparked a relief rally. The company’s stocks have been trading sideways since May of the downtrend and today’s rally.
Costain stocks continued to fall, despite the company releasing an upbeat half-year trading update in mid-June that suggested it had an order book of $ 4.0 billion as of the end of June.
The company had a net cash position of £ 113.0m compared to £ 140.9m recorded at the end of June 2020. However, despite the impact of the coronavirus on the company’s operations, investors appeared unimpressed by the strong numbers.
Costain reiterated its earnings guidance in May, with its board of directors saying current trading is in line with expectations, but the stock price continues to trade in a tight range.
The company’s shares traded in a range for most of the year after the impressive rally of more than 90% began in November 2020 and lasted until January 2021 before the range began.
In the face of the sharp November rally, sideways movement was expected as investors took profits and buyers and sellers struggled to regain control of price. So far, neither side has turned out to be a winning side, hence the trading margin.
Investors have been waiting for Costian stock to rebound, but recently bears have stepped in and started the recent bearish move. The company’s shares moved towards the 50p support zone, where buyers could have stepped in to defend the level.
In the meantime, investors should watch the stock to see if the uptrend continues in the future.
* This is not investment advice.
Price of the Costain share.
Costain stock was up 4% to trade at 54.6 pence, up 52.5 pence from Tuesday’s closing price.