Tip of the month

My tip this month is waste management specialist Shanks Group and I say this for a number of reasons. First is its bid potential, which would provide a windfall gain. Second is its latest pre-tax profits, which were £41.3m thanks to an 11 per cent increase in turnover to £564m. ABN Amro forecast 2009 earnings per share at 14.4p against 12p.

In an effort to clean up the planet, Shanks is benefitting from growing regulatory intervention in its overseas markets with underlying growth at 11 per cent. It has made some shrewd acquisitions including Fortonex in Belgium, taking it into the renewable energy market and Orgaworld in Holland to gain a share of the organics market and strengthen its position in Canada, where it has solid contracts.

In the UK, Shanks' trading profit more than doubled to £6.9m with profit margins also doubled to five per cent—and which should hit 10 per cent by 2011.

Buy Shanks Group at 223p with a trailing 20 per cent stop/loss to protect you against any major stockmarket fallbacks.