MIDAS SHARE TIPS UPDATE: Digger hire firm Ashtead’s investors clean up as shares soar
When disaster strikes, you can be sure someone, somewhere is profiting.
As hurricanes ravaged the Caribbean and coast of America this month, analysts turned their attention to Ashtead.
Midas first tipped the equipment hire firm in 2007 at 156p. We revelled in the success of that choice in 2012, by which time the shares were 331p.
Devastation: Ashtead equipment has been used after hurricanes Harvey and Irma
Midas said that investors would be wise to keep most of their shares, as it should continue to deliver for at least a couple of years.
How many of them, one must wonder, held on as they climbed to 1738p. Those who did might want to hold on a little longer.
Ashtead has already benefited from the pound’s plunge since the Brexit vote. The business draws 90 per cent of its revenues from the US, so it gets a boost when these profits are converted into sterling.
Shares have risen 240p in the past month, as experts say clean-up operations for hurricanes Harvey and Irma are already boosting Ashtead’s bottom line, which should be reflected in its second-quarter figures in December.
Ashtead has the second-largest market share in the US, making it well placed to benefit as clean-up and construction continues in the wake of the storms.
But investors should not get too hung up on that. After all, spending on reconstruction is not the same as new building work, and the damage suffered could cause economic growth to slow.
But Ashtead was doing well before the disasters. First-quarter results out last week revealed a 16 per cent surge in sales to £880 million and a 19 per cent jump in pre-tax profits to £229 million. Consensus forecasts are for full-year sales growth of 12 per cent and a 17 per cent uptick in profits.
The firm has put those rising profits to work, spending £116 million on five purchases in the first quarter. It has also invested £377 million in equipment and stores.
This means the firm has taken on more debt, but the strategy has brought efficiencies and so higher margins. Ashtead has been smart about its debt too, refinancing at lower interest rates for longer periods. And there is still the promise of President Trump’s US infrastructure spending to keep driving profits forward.
Midas verdict: While it is unlikely Ashtead investors will see such an enormous return again soon, they should hold on to their shares as there could well be more growth to come.
Most watched Money videos
- Land Rover unveil newest all-electric Range Rover SUV
- Blue Whale fund manager on the best of the Magnificent 7
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Mini Cooper SE: The British icon gets an all-electric makeover
- Leapmotor T03 is set to become Britain's cheapest EV from 2025
- Introducing Britain's new sports car: The electric buggy Callum Skye
- A look inside the new Ineos Quartermaster off-road pickup truck
- Mail Online takes a tour of Gatwick's modern EV charging station
- CVS sells Dutch and Irish vet businesses for just €2
- Would you work from a car office? Ford patent shows how...
- Screwfix owner Kingfisher suffers 'big-ticket' spending...
- The one thing you have to add to your shed to make sure...
- South West operator Pennon to hand-out £3.5m in...
- MARKET REPORT: Fresnillo sparkles as gold hits a record high
- Suits you sir! City slickers smarten up again: Briefcases...
- Bank sets the scene for summer rate cuts as deputy...
- Top investor throws weight behind Anglo American break-up...
- No more delays on rate cuts: Bank Of England must stop...
- BUSINESS LIVE: AstraZeneca eyes $80bn in sales; Credit...
- Visa and Mastercard could face transparency crackdown as...
- AstraZeneca targets $80bn in yearly revenues by 2030
- Cazoo collapses into administration putting more than 200...
- Stamp duty on shares must be axed, says London Stock...
- Now video game giant is buyout target: £2bn deal for...
- Sajid Javid eyes job at Shein as the Chinese fast fashion...
- Five magic words you must say to BT if you DON'T want to...