Latest news with #AshteadGroup
Yahoo
18 hours ago
- Business
- Yahoo
This UK stock has beaten Warren Buffett by 7x over the last 20 years!
Billionaire investor Warren Buffett is regarded as one of the best investors of all time. And it's not hard to see why. His value-oriented approach to the financial markets has paved the way to an average annualised return of 19.9% since the 1960s – almost double what the US stock market has achieved over the same period. However, despite his knack for finding lucrative investment opportunities, he seems to have missed a pretty big one here in the UK. The company in question is the equipment rental giant Ashtead Group (LSE:AHT). Since 2005, the stock's delivered a jaw-dropping 4,880% total return for long-term shareholders. By comparison, Buffett's investment portfolio at Berkshire Hathaway has 'only' delivered a 674% gain over the same period. That's certainly nothing to scoff at, but it pales by comparison. So what actually enabled Ashtead to deliver such explosive gains? And can the business continue to fire on all cylinders moving forward? While Buffett prefers to learn from his mistakes, learning from successes can also be a valuable exercise. After all, if an investor understands what went right, they now know what traits to be on the lookout for in the future. With that in mind, what's been behind Ashtead's tremendous growth? As always, there are a lot of factors at play. But in the case of Ashtead, management was early in spotting the trend of customers preferring to rent equipment rather than own it. After all, this drastically lowers start-up costs within sectors like construction and takes away all the headaches of machine maintenance. After leveraging this within its home market in the UK, management expanded to the United States under the Sunbelt Rentals brand. And after two decades, during which US infrastructure spending surged following the 2008 financial crisis, Ashtead now lies at the heart of many industries in America, generating close to 90% of its top line. In short, Ashtead massively benefitted from a first-mover advantage on a new secular trend. And with profits being reinvested in bolt-on acquisitions of smaller but profitable operators, prudent capital allocation decisions paved the way for strong profit margins and consistent value creation for shareholders. These are exactly the sort of competitive advantages Buffett likes to hunt for. With so much growth already under its belt, can Ashtead continue to be a Buffett-beating stock? The consensus analyst forecasts certainly suggest so. On average, it seems institutional analysts are expecting the Ashtead share price to grow by another 35% over the next 12 months. This upward trajectory's driven by the group's continued organic growth within the US market. However, it seems excitement's starting to brew as the firm expands into new markets like Canada, seeking to replicate its US success. However, not every analyst is too keen on this international expansion plan. There are growing concerns that Ashtead might be unnecessarily exposing itself to integration risk and going beyond its financial capacity if its core US market suffers an economic slowdown. After all, the bulk of equipment rental demand comes from the construction sector, which is notoriously sensitive to economic volatility. Nevertheless, with management's impressive track record of capital discipline, this stock seems worthy of closer investigation, even after achieving such tremendous growth so far. The post This UK stock has beaten Warren Buffett by 7x over the last 20 years! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Ashtead Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Melden Sie sich an, um Ihr Portfolio aufzurufen.
Yahoo
18-05-2025
- Business
- Yahoo
Is Now The Time To Look At Buying Ashtead Group plc (LON:AHT)?
Let's talk about the popular Ashtead Group plc (LON:AHT). The company's shares saw a decent share price growth of 19% on the LSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let's take a look at Ashtead Group's outlook and value based on the most recent financial data to see if the opportunity still exists. Our free stock report includes 1 warning sign investors should be aware of before investing in Ashtead Group. Read for free now. According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. We find that Ashtead Group's ratio of 16.49x is above its peer average of 13.14x, which suggests the stock is trading at a higher price compared to the Trade Distributors industry. But, is there another opportunity to buy low in the future? Given that Ashtead Group's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility. See our latest analysis for Ashtead Group Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. With profit expected to grow by 40% over the next couple of years, the future seems bright for Ashtead Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation. Are you a shareholder? AHT's optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe AHT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed. Are you a potential investor? If you've been keeping an eye on AHT for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for AHT, which means it's worth diving deeper into other factors in order to take advantage of the next price drop. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 1 warning sign for Ashtead Group you should be aware of. If you are no longer interested in Ashtead Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
05-05-2025
- Business
- Yahoo
ChatGPT says investors must watch these FTSE 250 stocks!
The FTSE 250 isn't as popular as the FTSE 100 among UK investors. However, the mid-cap index is home to several businesses with promising growth potential. And by investing early in these long-term winners, immense wealth can be unlocked. In fact, that's precisely how companies like Ashtead Group and Games Workshop went on to become millionaire-making stocks. Obviously, finding which of the 250 shares in this growth index will be the next big thing is far easier said than done. So I enlisted the help of ChatGPT to see if the artificial intelligence (AI) tool could help narrow the search for the next millionaire-making stock. The AI model made a few mistakes recommending companies that aren't actually in the FTSE 250 index. But after filtering these out, we're left with Greggs, Grainger, Greencoat UK Wind, and QinetiQ Group (LSE:QQ.). Blindly following any investment recommendation is never a good idea. So let's do some due diligence. Greencoat's actually a stock I already have in my portfolio, which is quite encouraging. However, it's hardly what I'd describe as an investment with 'millionaire-making' potential. After all, the firm invests in wind farms to generate a steady cash flow that funds a dividend. That's great for income investors to be happy taking on the risk of a higher debt burden, but that's not what I'm looking for here. Grainger also seems like an odd pick. The private residential landlord also has a substantial and growing debt pile that could prove quite troublesome, especially since revenues have actually been shrinking since 2022. The company does have a substantial pipeline of new property development projects that could help turn things around, but the UK housing sector doesn't exactly have the greatest of track records. What about Greggs? The bakery chain has been hit with some hard times lately. Rising costs have forced the company to raise prices, and that seems to have stalled sales and volume growth compared to historical levels. The firm remains a cash flow-generating machine, which is undeniably a good sign. But a stalled growth engine isn't a trait of a millionaire-making stock. So far, ChatGPT's FTSE 250 recommendations aren't looking all that promising. Perhaps QinetiQ might help turn things around? The aerospace company is certainly showing a bit more promise with a growing order backlog, double-digit earnings and sales growth over the last five years, and nice chunky operating margins. The group's debt load also appears to be quite healthy, with an interest coverage ratio just shy of 10. Contract award delays in UK and US defence spending have recently created a few headaches, resulting in a profit warning earlier this year. However, due to this volatility, the price-to-earnings ratio now sits at a pretty cheap-looking 16. And with a market-cap of just £2.1bn versus an estimated total addressable market size of more than £30bn, it has lots of room for growth. Future contract delays or cancellations will remain a prominent risk, especially since governmental defence spending makes up a large chunk of sales. But overall, this seems like a business worthy of a more thorough investigation to see if it could become the next Ashtead or Games Workshop. The post ChatGPT says investors must watch these FTSE 250 stocks! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has positions in Games Workshop Group Plc and Greencoat Uk Wind Plc. The Motley Fool UK has recommended Ashtead Group Plc, Games Workshop Group Plc, Greencoat Uk Wind Plc, Greggs Plc, and QinetiQ Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
06-04-2025
- Business
- Yahoo
US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian
This week's announcement of 10% trade tariffs on UK goods to the US has sent shockwaves through British markets. With transatlantic trade under pressure, several UK shares could feel the impact — particularly those with significant exposure to the American market. Although many UK businesses deal with the US, three in particular stand out due to their high sales in the region. These companies that appear to be most exposed are Ashtead Group (LSE: AHT), Compass Group (LSE: CPG), and Experian (LSE: EXPN). Let's see how the new tariffs could affect the performance of these stocks going forward. Ashtead Group is a British equipment rental company that has achieved tremendous success in America. It now generates 92% of its sales through its US-based Sunbelt Rentals division. If tariffs are extended to machinery or parts sourced from the UK, the company may encounter higher costs that could squeeze margins. The stock is already down 11% since tariffs were announced, almost double the 5.7% drop of the FTSE 100. At £37.24, it's now at its lowest level in almost three years. The company has already planned to move its primary listing to the US and may now choose to fully relocate there. In the long run, such a move could be highly beneficial for the company but I think it's wise to hold off until there's more clarity. As the world's largest catering firm, Compass Group operates extensively across schools, hospitals, and corporate campuses worldwide. The extensive number of contracts it holds in the US accounts for 68% of its sales. While much of the firm's US sourcing is domestic, any UK-supplied speciality goods or services could be impacted, raising concerns about cost management and potential contract renegotiations. The shares suffered only a minor 2.5% drop when the tariffs were announced, reflecting confidence among investors. They remain up 134% over the past five years. Since tariffs largely target automotive, electronics, consumer goods, and agriculture, I don't think Compass will be badly affected. However, it already has a high price-to-earnings (P/E) ratio of 41.3, so growth could be slow. I'll consider the stock only if earnings increase considerably in the next results. Experian is one of the world's largest consumer credit reporting firms, deriving 66% of its income from North America. Fortunately, most of its services are digital and data-based, meaning direct exposure to tariffs is limited. However, any deterioration in UK/US relations could have indirect effects on regulation, data-sharing agreements, and cross-border operations. The shares are down 8.3% since the announcement, slightly above the FTSE 100. But like Compass, I don't expect Experian to be hard hit by the tariffs. The biggest risk may be competition from US-based rivals like Equifax and TransUnion. At the same time, UK-based firms that use these rivals may choose to switch to Experian as a result of the tariffs. Price targets still look good, with analysts expecting a 30% price increase in the coming 12 months. Overall, I like its prospects and think it's still worth considering, despite the tariffs. The post US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Mark Hartley has positions in Compass Group Plc. The Motley Fool UK has recommended Ashtead Group Plc, Compass Group Plc, and Experian Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
06-04-2025
- Business
- Yahoo
Is Ashtead Group plc (LON:AHT) Worth UK£37.9 Based On Its Intrinsic Value?
Using the 2 Stage Free Cash Flow to Equity, Ashtead Group fair value estimate is UK£28.46 Current share price of UK£37.89 suggests Ashtead Group is potentially 33% overvalued Our fair value estimate is 52% lower than Ashtead Group's analyst price target of US$59.34 Does the April share price for Ashtead Group plc (LON:AHT) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Don't get put off by the jargon, the math behind it is actually quite straightforward. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$1.42b US$1.81b US$1.91b US$1.32b US$1.20b US$1.12b US$1.09b US$1.07b US$1.06b US$1.06b Growth Rate Estimate Source Analyst x8 Analyst x8 Analyst x7 Analyst x1 Est @ -9.50% Est @ -5.96% Est @ -3.48% Est @ -1.75% Est @ -0.53% Est @ 0.32% Present Value ($, Millions) Discounted @ 8.9% US$1.3k US$1.5k US$1.5k US$940 US$781 US$675 US$598 US$540 US$493 US$454 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$8.8b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.3%. We discount the terminal cash flows to today's value at a cost of equity of 8.9%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$1.1b× (1 + 2.3%) ÷ (8.9%– 2.3%) = US$17b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$17b÷ ( 1 + 8.9%)10= US$7.1b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$16b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of UK£37.9, the company appears reasonably expensive at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Ashtead Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.9%, which is based on a levered beta of 1.282. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Ashtead Group Strength Debt is well covered by earnings and cashflows. Dividends are covered by earnings and cash flows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Trade Distributors market. Opportunity Annual revenue is forecast to grow faster than the British market. Good value based on P/E ratio compared to estimated Fair P/E ratio. Threat Annual earnings are forecast to grow slower than the British market. Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value lower than the current share price? For Ashtead Group, we've compiled three important aspects you should assess: Risks: Take risks, for example - Ashtead Group has 1 warning sign we think you should be aware of. Future Earnings: How does AHT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart . Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
