Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares in Meggitt (LSE: MGGT) surged by more than 10% in early trade this morning, following rumours circulating at the Farnborough Air Show that the Dorset-based global engineering group is being eyed up for a takeover by a US predator.
So what: These types of events are as much for the companies as for the crowds — for example, engine maker GE Aviation earlier this week claimed that it was expecting $30bn worth of orders during this year’s show — and despite only being whispers currently, Meggitt’s bounce in share price shows that it’s not just rumours confined to the City that are taken seriously by the market.
Indeed, analysts looking at Meggitt see a strong financial position and cash-generative future — putting the aircraft-parts manufacturer in pole position for a possible M&A approach. One such company touted as a potential bidder is United Technologies, a multinational conglomerate in the aerospace and building industries, which could launch a £5bn takeover bid if these claims have any substance.
Now what: Meggitt’s shares are down by around 7.5% year to date, and could be seen as attractive for a potential buyer. Shareholders currently take away a 2.7% yield, which is covered over 2.5 times, offering security. Of course, the decision to ‘buy’ is solely your decision, and requires research rather than just investing on unsubstantiated whispers.
