Oxfordshire-based Cohort, the technical services group working for defence and government clients, is gathering significant contract momentum, having secured £28m worth of deals in 2008 to date.

Spread across all three divisions, the latest £6.9m worth of wins announced by the acquisitive company include a contract for its MASS arm, worth more than £1.2m, for the design and manufacture of electronic equipment for the RAF’s Tornado aircraft. Fellow subsidiary SCS has been awarded further training-related work with the UK Ministry of Defence, worth £2.9m, through the Lockheed Martin-led Team Athena, while SEA has clinched a £2.75m deal with AgustaWestland Helicopters for the provision of Merlin Helicopter vibration monitoring equipment. Stanley Carter, chief executive, says the wins ‘reflect the Cohort group’s wide engagement with the defence industry’.

Investors who followed our advice – the shares were recommended by Growth Company Investor at 161.5p earlier this year – should be encouraged by strong contract momentum across all three divisions and the group’s growing order book. Forecasts from house broker Investec for the year to April just-ended suggest significantly increased pre-tax profits of £5.5m (2007: £2.9m) and earnings of 11.9p (2007: 8.9p). For 2009, investors could expect a further healthy profits rise to £7.4m, with earnings increasing to 13.9p.

Based on those numbers, the shares remain relatively inexpensive, trading on less than 14 times forecast 2009 earnings. With the Cohort story gathering momentum and analysts having set a 225p price target, now is the time to top up existing holdings.

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