Ashtead has been a very good recovery stock.One to watch leading up to results 13th December and beyond.

Ashtead Group AHT looks like its got a lot of momentum behind it in a nice uptrend channel.



Fairly recent broker Buy Note out aswell with a 160p target.....

Date Broker name New Price Old price target New price target Broker change

28-Apr-10 UBS Buy 120.60p 120.00p 160.00p Reiteration

Profit plunges to 5 million pounds this year from 87.4 million pounds last year.

Ashtead

110p


Questor says BUY

The stock market is a leading indicator. Its movements are, in theory, based on a consensus view of future events. That's why people say "the market is never wrong", even though sometimes it patently is.

This means that shares in a cyclical company rise in anticipation of an increase in profitability before it happens.

On this basis, Ashtead was recommended as one of Questor's tips of the year on January 1.

Ashtead hires plant and equipment to the construction sector, with about 80pc of its business being in the US.

The most significant thing about the company's 2009 results released last week was not that the group saw an 87pc slump in profitability to 5m. The important thing is that the company managed to stay profitable in what was one of the worst years the industry has experienced. This is a credit to the company's management, size and flexibility.

Revenues in the year to April 30 fell by about a quarter, but the last three months of the year between January and April saw a definite improvement. Revenues were down just 3pc on a year-on-year basis.

Of course, there are still major problems in Ashtead's end markets. Geoff Drabble, chief executive, told Questor last week that from February onward the company had seen a "gentle" improvement in the amount of the group's fleet that was on rent, as well as yields.

A gentle recovery in US construction is likely to give a significant boost to Ashtead's margins and cash flow. Last year, 80pc of revenues came from North America, with 87pc of profits generated in the region.

Management have managed the downturn well. Not only has net debt been cut at this challenging time to 829m from 1.036bn over the year but the company bought back 10pc of its equity at an average price of 67p a share.

Usually, Questor is not a fan of share buy-backs. Companies tend to do it when they are generating excess cash in a boom time and the share price is high. This is not as efficient a way of distributing cash to shareholders especially if the share price falls.

However, buy-backs undertaken when the share price is low should have a very positive effect when markets improve. Ashtead got this one right.

The company even raised its dividend payment. The final dividend was 2p, making a total payout for the year of 2.9p, compared with 2.575p in the previous year.

The final payment will be made on September 10 and the shares go ex-dividend for this payment on August 18. The company plans to keep the dividend at a "sustainable level" through the cycle, which is also a good example of the management's prudence.

Ashtead plans to invest 175m of its cash flows in its fleet over the next year to replace the older part of its fleet, to keep the average age of its equipment flat. This is a prudent move.

The shares are trading on an April 2011 earnings multiple of a heady 92.5 times, but this falls to 17.9 in 2012 and 10.1 in 2013. The yield is 2.6pc.

The shares were tipped in January at 81.2p and they are up 35pc compared with a market down 3p. The shares remain a buy for recovery and Questor regards them as one of the best plays on a US recovery although any double-dip recession could hit the shares hard.

The shares are trading on an April 2011 earnings multiple of a heady 92.5 times, but this falls to 17.9 in 2012 and 10.1 in 2013.

And this is rated a buy !!!!!!!!!!

Like you can't find better value elsewhere.

This is still looking expensive at 100p... since it depends much on US economy.
Wait for 80p.

Keep on shorting AHT... 70p target 4 me... don't listen to Questor.

The chart suggests that 90 is as low as it is likely to go,unless the market takes a further nosedive. It is down from highs of about 125 a few months back

This will slide from here as forecast is not as healthy as it seems... 93p now

The 2 year chart suggests a nice move to the upside to 120-125

Given as a bid target and a buy in this weeks' Shares' at 99.9p

Questor share tip: Ashtead is one of the buys of the year

By Garry White
Published: 6:40PM BST 17 Aug 2010

1 Comment

Ashtead

94.65p +4.9p


Related Articles
Ashtead: shares, charts, data says BUY

Plant-hire group Ashtead is one of Questors 2010 tips of the year. The company has difficult end markets but the shares should outperform significantly when the recovery takes hold.

Ashtead hires plant and equipment to the construction sector, with about 80pc of its business being in the US

The downturn could benefit the group over the longer-term. As one of the USs largest players, the company only has a 5pc market share. Smaller players have not been able to invest in their business but Ashtead plans to invest 175m in its fleet over the next three years. It remains profitable and continues to pay a dividend.

There is also likely to be a shift to rental. Companies are renting large equipment instead of buying it as they try to preserve capital.

A gentle recovery in US construction is likely to give a significant boost to Ashteads margins and cash flow. Last year, 80pc of revenues came from North America, with 87pc of profits generated in the region.

One interesting point to note is the relative performance of Ashtead shares and its US-listed peer. US-listed United Rentals has outperformed Ashtead over the past few months and both companies operate in the same market. This gap is likely to close.

The shares are trading on an April 2011 earnings multiple of a steep 65.5 times but the last time Questor updated on the shares this multiple stood at 95. This falls to 15.3 in 2012 and just 9 in 2013. The yield is 3.2pc.

The shares were tipped in January at 81.2p and they are up 17pc compared with a market down 3pc. Buy ahead of the first-quarter update on September 7.

70p on the cards... my target getting nearer.

so much for scribbler questors great tips, what do journos know about shares?!!

US housing down (News item a few days ago)- seems the US housing recovery isn't likley to light many lights.
I suspect like here, there are too many properties spare ( bought in good-times and now unsold/unwanted and falling in price)
...so who is building new?
Without new homesteads there is little need to more infrastructure....which is where Ashtead comes in......only when Builders have "used-up" their own plant - at current levels I don't suppose much Plant is being used...let's hope they let it rust, so AHT can hire new - but it won't be for a couple of years, probably four, IMHO.
((It just doesn't look good to have too much Plant on your Books.))
At least in UK we have the Olympics - and building should continue past 2012, as we second-fix earlier mistakes.....oh well.


Questor is probably right "when" the market turns, AHT will outperform . . . . but that's no comfort to LT-holders: I suspect we may have to wait until beyond 2012 so wait a little longer, eh when the PE ratio is below 10.
-but what do I know, either?

Sounds logical to me I'm waiting too

First quarter figures from equipment rental firm Ashtead should generate full year earnings estimate upgrades, Singer Capital Markets believes, with the outlook for the company looking promising.

First quarter profit before tax of 11.9m significantly exceeded consensus, and our own very bullish estimate of 7.4m. However, Ashtead is building momentum in both its US and UK operations with the supply/demand relationship in balance, rates rising and its peers also reporting similar trends, said FinnCap analyst Andy Murphy.

The broker thinks the current valuation looks compelling and it has reiterated its buy recommendation and 185p price target.

Based on Singers earnings forecasts for fiscal 2012 the company is trading on a price/earnings ratio (PER) of 10.3, and this is projected to fall to 7.4 in 2013. This compared to an average mid-cycle for ward PER of 16.5 for the sector.

Finally, with the dividend now increasing, holders can look forward to an increasing return. We anticipate the dividend will be more than covered by earnings this year giving scope for Ashtead to exceed current dividend growth expectations, the broker said.

Ashtead is my bogey stock.
When I buy the market decides that it is time to sell,and when I sell,
Well I think you can guess the answer to that!

This is one to short because it has excess exposure to US which is at risk of double-dip.