On the hunt for the very best shares to purchase, I seen one worth inventory not too long ago: Costain Group (LSE: COST).

Let’s dig deeper into the enterprise, in addition to my funding case.

Constructing the long run

Costain is a sustainable infrastructure options supplier with a long time of historical past underneath its belt. It performs a pivotal function in constructing important infrastructure we use on a day-to-day foundation, reminiscent of roads, bridges, and extra.

The shares have been on a improbable run in these previous 12 months. Presently final yr, they had been buying and selling for 46p, in comparison with present ranges of 85p, which is an 84% rise.

My funding case

Costain’s expertise working with the federal government, the development and infrastructure trade, in addition to historic observe document are main plus factors for me. The agency possesses intensive expertise in lots of several types of infrastructure, and is seen as an trade chief. Costain continues to win profitable contracts, together with the most recent, a young to assist enhance water and wastewater belongings for Southern Water.

Subsequent, the necessity for elevated infrastructure spending within the UK might assist Costain develop future earnings and returns. That is linked to our ageing infrastructure, in addition to the UK inhabitants rising, which must be addressed.

Shifting on, the basics look good too. The agency has a superb observe document of previous efficiency. Nevertheless, I do perceive that the previous isn’t a assure of the long run.

Costain shares look good worth for cash to me as they commerce on a price-to-earnings ratio of simply 10. Nevertheless, I can see this valuation rising if its share price and efficiency proceed upwards.

Lastly, the Costain board reintroduced the dividend earlier final yr. That is one other signal of a enterprise on the up because it determined to reward its shareholders. At current, a dividend yield of 1.4% helps my funding case. Nevertheless, I do perceive that dividends are by no means assured.

Dangers and what I’m doing now

I’ve two fundamental issues that I reckon might dampen Costain’s progress and momentum. Firstly, it’s on the mercy of financial volatility. Plus, one-off occasions just like the pandemic might halt, or at the very least delay, infrastructure spending. Latest turbulence resulting from inflation and better rates of interest have shone a highlight on the federal government and infrastructure spending. With the brand new Labour authorities speaking of a monetary black gap, some initiatives may very well be on the chopping block.

Subsequent, though inflation appears to be underneath management at current, rising prices might take a chew out of revenue margins. It is a fear as these income underpin progress initiatives, in addition to investor returns.

Total, I reckon the professionals outweigh the cons. I’d be prepared to purchase some Costain shares when I’ve some out there funds. An excellent observe document, trade expertise, and present relationships, an attractive valuation, and a passive revenue alternative assist my determination.