The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
last set of results, record profits, share price soared resutls before that, record profits, share price plunged (capex fears). So who knows? AHT is a very odd company. Its basic idea is to borrow large amounts from the bank, spend it all on machinery, and rent that out at a profit. This is fine for as long as the demand is there, and in principle it wouldn't matter how much they borrowed or how much they spent on plant provided they could continue renting it all out. Meanwhile the shareholders benefit from participating in a much bigger company than could be financed by equity alone. The problem is that if the benign market condtions they are enjoying start to cloud over, they have lots of machines sitting around idle and the banks stil wanting the interest. (Incidentally I think it's a bit cheeky the way they talk up the EBITDA, like the banks let them have the money for free and the machinery is of a special magical type that doesn't wear out as its hacked around the muddy building sites.) Er, so where am I going with this? Not sure really, just dont' want to be too complacent about next week's results, especially given recent SP weakness.
An interesting fact about IMT is that its price sales ratio is five times lower than BATS's. This means that if IMT sorted itself out and discovered the secret of making a decent profit on a packet of fags its share price could rise up to five times! Just so that the only two tobacco companies in the FTSE could sit there side by side on about equal terms. How is that going to happen? (1) IMT find out all by themselves how to convert their massive revenues (double BATS's) into a decent profit or (2) someone else does it for them. In a world of static/shrinking demand it must be galling for IMT's profitable competitors to know that every pack that IMT sells on its own inept terms is one less they could have sold themselves.
When I say 'wouldn't touch with proverbial", perhaps more accurately should have said "outside my circle of competence". I'm sure there's lots of money to be made on single-product companies if you know what you're about, but I don't so I treat them all equally, ie disregard them.
Strange, i have a lot of shares and a lot of paper profit in AHT and I didn't find the comments at all arrogant. If anyone asked me why I have shares in AHT I'd be able to tell them, likewise I'd be able to tell them why I wouldn't touch the likes of QPP or COMS with the proverbial. NB QPP, the bulletin board that never sleeps, really is compulsive reading. It's even spilled over into Trip Advisor where the establishment of a certain financial commentator stroke pizzaria owner is suddenly acquiring lots of one start reviews. Totally priceless.
http://www.forconstructionpros.com/press_release/11502394/united-rentals-named-to-2014-fortune-500-list-of-largest-revenue-generating-companies I reckon what's good for United Rentals is good for Ashtead, more or less.
soft is good. No matter how clever Ashtead are at 'managing the cycle' and no matter how reassuring the Geordie accent on the presentation downloads, I don't believe that AHT's share price can survive peak of cycle. So anything that suggests that recovery is patchy, could do with a helping hand, and has hardly even begun is positive. This one here looks good: http://www.constructionequipmentguide.com/Construction-Employment-Increased-in-39-States-and-DC/22824/ Incidentally note that United Rentals, which is at or near its 12 month best, is on a p/e 20% higher than Ashtead, even more if you add in that AHT pays a dividend and United Rentals doesn't.
in the fall from high 900s to low 800s I've not seen ONE negative piece of news about Ashtead or its prospects. Instead I've seen United Rentals hit a 12 month high, UK interest rates kept on hold, and various other bits of probably good news. As a highly geared cyclical Ashtead's SP will in time become vulnerable to horizon watchers; but for now it has several trends in its favour (US shift to rental, US rental market consolidation, cyclical recovery, fracking), and everything i've read suggests these trends could have some years to run. Having been stop lossed out of Thomas Cook this morning (thankfully!) I have lots of spare pennies to find a home for, and increasing my AHT holding seems as good a choice as any.
http://rermag.com/headline-news/rental-equipment-industry-thrives-outpaces-us-gdp Ashtead sets the pace, albeit the 'magic' appears to derive from its expert and extensive use of debt, which could turn round and bite it if the market falters! The analyst Q&A session on their website is worth a listen. As Geoff Drabble says, the big are going to get bigger.
Got thrown out at 65p by a stop loss after a short but profitable hold, but I still keep tabs on it. The numbers do indeed suggest turnaround potential; what makes me hesitant about jumping back in is that has to do business with a relatively small number of customers all of which (a) have problems of their own and (b) can bring more muscle than WIN to the negotiating table. The profit margin probably reflects this. No doubt they will benefit from the greater traffic generated by the inevitable pre-election boom; however it's not obvious to me at the moment why they should 'fly'.
http://www.moodys.com/research/Moodys-upgrades-Ashtead-to-Ba2-from-Ba3-outlook-stable--PR_277913 Positive news + useful overview of Ashtead's markets and prospects.
The interest cover is comfortable 4.5 times, so the debt is a positive if you believe this company and/or the UK economy is in recovery. In the two months I've held these shares I've made enough to fund my TCG rights issue. Still have 3/4 of my original holding. Is it a good idea to hold long term in an invisible company that doesn't pay a dividend? Not sure. My compromise is a stop loss to lock in my profits. I'm hoping it won't be triggered and that the SP will move safely towards the target prices.
Everything indicates that Ashtead are still at the early stages of the construction cycle and hence the shares have some way to go. The company acknowledge that they have benefited from two pieces of luck, namely Hurricane Sandy and the merger (disruptive) of their two biggest US peers. However they identify two wider positive trends: a tendency for US construction companies to rent instead of buy; and the ability of large well-funded businesses to gain market share at the expense of the smaller operators. Here's hoping. Ashtead is highly geared (big debts, big fixed costs) and its fall when the construction cycle peaks will be steep. I think this is months or years off, so the fluctuations don't really bother me. With a p/e ratio of 32 I don't think we can be anywhere near peak.
currently ranks at 93, ie ahead of 10 FTSE100 companies, but behind two FTSE250 companies. I think this means it would miss out on the June promotion, assuming position remains unchanged. Obviously when(?) it hits £8.50 it will be well in!