Are Parkwood shares worth holding on to?

Despite having risen more than 25% so far this year, says Dan Coatsworth in Shares magazine, Parkwood Holdings (PKW, 74p) remains good value. Parkwood has four main areas: Glendale provides outsourced maintenance for golf courses and open spaces; Parkwood Leisure manages a range of leisure facilities, such as sports halls and pools; Parkwood PFI undertakes public finance initiatives and public private partnerships with the Government; and Parkwood Healthcare runs nursing and ambulance services in London and the southeast.

The company has been firing on three cylinders. Glendale has just won the group's largest contract, Leisure has increased its order book to £253m from £143m and PFI is in the final stages of bidding "on a large PFI deal with the Ministry of Defence". The only fly in the ointment is the loss-making Healthcare division, which has been given a 12-month deadline to shape up.

Whatever happens to Healthcare, the shares look cheap. Profit forecasts are flat, but that is on account of the structure of PFI projects, which "are modelled for losses in the first few years". Nevertheless, revenues are forecast to increase to £94.5m this year, followed by £99.5m in 2007, with earnings rising from 6.25p to 7.12p per share. Yet the firm is confident it can boost revenues to £100m this year alone. With a market capitalisation of £14.6m, that makes it cheap on both a price-to-sales ratio and a p/e basis. Buy, say Shares, Brewin Dolphin (with a price target of 95p) and
Peter Temple in the FT. I agree.