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It’s looking increasingly likely that 2016 will be a comeback year for specialist engineering firm Meggitt (LSE: MGGT), with the group looking to return to growth after two years of earnings decline. Last year was certainly not a vintage year for the defence and aerospace specialist, with the shares falling off a cliff shortly after announcing a profit warning in October, leaving the shares trading 40% lower than their peak of 587p just a few months earlier.

Contract wins

In complete contrast, October of this year was a time to rejoice, as the group headquartered at Bournemouth Airport announced the first of two recent contract wins, totalling $68m. The first of which was the $48m contract awarded to the firm’s Sensing Systems division to supply Health and Usage Monitoring Systems (HUMS) from Chinese engineering and maintenance organisation Guangzhou Hangxin Avionics, for its helicopters. And earlier this month the Training Systems division was awarded two small-arms training contracts from the Ministry of Defence worth around $20m.

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In its latest trading update, the FTSE 250 engineer reported a 6% rise in organic revenue during the third quarter of its financial year, which excluded the effects of mergers & acquisitions and currency movements. The numbers were even better before stripping out the effects of M&A activity and foreign exchange, with the group reporting an impressive 28% rise in revenue for the three months to the end of September.

I think Meggitt is back in business and returning to winning ways, with our friends in the City expecting full-year revenues to increase by £259m this year to £1.91bn, with pre-tax profits leaping to £305m, from the £210m it posted in 2015. Despite gaining around 20% since May, the shares still look good value to me trading at 14 times forward earnings for 2016, falling to 13 by the end of next year. The firm has always been a consistent dividend payer, improving payouts each year, and currently offers a prospective yield of 3.2%. I think now could be a good time to buy.

New record

Another Bournemouth-based firm delivering good news recently is retirement housebuilder McCarthy & Stone (LSE: MCS). Earlier this month the UK’s leading retirement housebuilder announced a very positive set of results for its first year trading as a public company, with revenues rising 31% to a new record £635.9m. The mid-cap firm said it delivered industry-leading growth in revenue and unit completions and remained on track to build and sell more than 3,000 units each year over the medium term.

I like the fact that the group continues to capitalise on the attractive demographic opportunity and shortage of supply of retirement housing in the UK. Analysts’ forecasts suggest that the current year will be even better than the last, with 11% earnings growth predicted for the year to the end of August 2017, leaving the shares trading at a bargain 11 times forward earnings for fiscal 2017.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Meggitt. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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