Stock Of The Week Macmahon Holdings

Macmahon Holdings (MAH) is a leading contractor providing services to customers in both the mining and civil construction sectors, and is one of the stock picks this week.

MAH consists of two key business units – mining and construction – and its clients and JV partners are typically big names, including BHPBilliton and Leighton Holdings.

Over FY09, MAH had to battle a downturn in demand owing to a sluggish sector under the force of the global economic downturn.

However, on February 16 this year, MAH impressed the market with a 52% jump in 1H10 net profit to $21.5 million.

MAH has seen a significant rebound in contract tenders in the past six months, with more work currently being tendered than before the onset of the global financial crisis.

As a result, the company raised its full-year guidance, now expecting a net profit for the full year of $36-$40 million – slightly above its November guidance of $34 million.

This week, Macmahon Holdings entered into an agreement with Leighton Asia to deliver a major rail contract in Hong Kong.  MAH will receive $115 million to participate in the project.

With its expected earnings growth, and the recent Leighton contract, Macmahon Holdings is one of the best stock picks at the moment. This is why it is the Australian Stock Reports stock of the week.