The completion of the Eurostar platform at St Pancras was seen by many observers of Costain to symbolise a new era for the company. Once a venerable British construction business, much of its recent history has been dogged by frequent refinancing and doubts over the future of the operation.

The company was one of the biggest victims of the last severe downturn in housing, in the early 1990s, and had its shares suspended twice in 1996 while details of a £47 million rescue rights issue were decided.

This time, Costain is better prepared. Management installed in the past few years have helped to steer the company away from the stricken housebuilding sector and the international market towards more public sector projects, which should be relatively resilient to the downturn.

Both Andrew Wyllie, the chief executive, and Anthony Bickerstaff, the finance director, joined the company from Taylor Woodrow, now part of the unhappily merged Taylor Wimpey, and must be glad that they are no longer exposed to the vagaries of the housing market.

Yesterday’s interim results made relatively pleasant reading, with pre-tax profits up 26 per cent at £10.1 million. A £2.6 million loss in the building division was attributed to provision for additional costs on a specific residential project.

Several contract wins, including a £250 million deal with Hutchison Ports for redevelopment of the port of Felixstowe, mean that advance orders are now worth £2 billion – a record for the company.

In theory, Costain should be almost immune to a downturn, with civil engineering projects accounting for more than 80 per cent of its order book and with long-term partnership deals with several big clients such as Southern Water. There is a danger that it will suffer if British government spending on new construction slows in the next few years, which seems increasingly likely as revenues from stamp duty fall and the deficit grows. Costain has little exposure to the international market, apart from a headache-inducing piece of land in Spain that it is trying to sell, but may need to expand outside the UK again in future.

Rumours of a bid by Balfour Beatty, its cash-rich rival, based on Costain’s presence in roadbuilding and good relationship with the Highways Agency were dismissed yesterday by management.

Mr Wyllie said that he expected Costain to be predator rather than prey if there was more consolidation in construction, and he aims to make Costain one of the five biggest players in British construction in the next five years.

Costain’s battle-hardened investors have recently started to receive dividends for the first time in 15 years. The company may be about to repay their loyalty. New investors should tread cautiously until the future becomes more clear.

Independent News & Media

Independent News & Media has long defied the problems in the newspaper sector because of its exposure to fast-growing economies such as Ireland, South Africa and Australia. So, historically, nobody paid too much attention to the loss-making The Independent in London because UK profits (the Indy is propped up by the Belfast Telegraph) are only 3 per cent of the whole group’s income.

This exposure, together with the arrival of Denis O’Brien, the rebel investor, on the register, bringing hopes of a takeover, have helped to ensure that IN&M trades at a premium to its British rivals. The valuation, 7.8 times earnings at last night’s €1.44, is well below what newspapers fetched three years ago, but healthily above, say, Johnston Press, which trades at three times this year’s profits.

Yet strengths can turn to weaknesses. Interim profits at the key Irish and Australian businesses dipped as the economies eased. Only South Africa advanced, but is too small to offset the triple hit of British, Irish and Australian downturns probably will get worse.

Meanwhile, O’Brien seems likely to yield little: selling The Independent would be achieved only over the dead body of Sir Anthony O’Reilly, the chief executive. With no obvious catalyst, a high valuation and weakening underlying economies, there is little reason to buy. Avoid.

Asos

It’s not hard to spot Nick Robertson, the chief executive of Asos, the online clothing store. He is the only retailer in Britain with a smile on his face.

At a time when the high street is suffering one of its biggest slowdowns for decades, the internet is continuing to defy gravity. Online clothing and footwear sales rose by 23 per cent in July and it is entirely likely that the growth rate at Asos is much higher still. This year it said that sales were up 90 per cent and, speaking a fortnight ago, Mr Robertson said that the group had taken £1 million in a day for the first time, adding: “It’s growing like stink.”

Shares in the business have trebled in the past year and they closed up another 5 per cent to an all-time high of 375¼p yesterday as Goldman Sachs initiated coverage with a “buy” recommendation.

Despite the fact that Asos generates only £80 million of sales a year, Goldmans believes that the stock could hit 455p as more shoppers switch to buying goods online – giving Asos a market value of more than £320 million.

The stock is not cheap, with a price to earnings ratio of 19.7 times forecast profits, way above the sector average. However, Asos is in a prime position to benefit from the changing market dynamics and, as it heads into Christmas with a range of more than 10,000 products, overseas expansion is likely. Hold.

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