Stock of the Week: Ashtead

VIDEO: Investors have high expectations of this equipment rental supplier, but a lot depends on the US economy

James Gard 11 September, 2023 | 8:54AM
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James Gard: Now investors generally gravitate towards new and exciting themes and companies. Witness the current euphoria over AI and Nvidia. But there are industries that tend to occupy the unglamorous middle lane while doing perfectly well for investors. Our latest stock of the week, Ashtead, could be described as one of these. Unlike most modern companies, it’s relatively easy to explain what it does: it leases industrial equipment to companies in the UK, Canada and the US. For example, it rents power equipment to TV and film studios. Under Joe Biden the country is spending more than a trillion dollars on infrastructure projects. And that has driven demand for Ashtead, which is number two in this key market. There were some chunky revenue gains in the most recent quarter and Ashtead continues to expand in the US with nine recent acquisitions.

The UK is a weaker spot, however, and Ashtead has cut its revenue forecasts here for the rest of the year. With all the headline numbers moving in the right direction in this quarter, it was surprising to see shares take a tumble, especially as the full-year earnings outlook was left unchanged. Some minor issues may have unnerved investors used to stellar performance for Ashtead. Still shares are up 10% this year roughly and this follows a very strong run since 2020. Shares are trading slightly above their fair value estimate of £43.50, according to Morningstar metrics. Some analysts have price targets considerably higher. It’s still early in the company’s financial year so a lot depends on the resilience of the US economy heading into next year. For Morningstar, I’m James Gard.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard

James Gard  is senior editor for


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