Ashtead Share Discussion Threads

[disc0dave45] 07/10/2022 18:35

Liberum seem positive! Liberum upgraded equipment rental firm Ashtead on Friday to 'buy' from 'hold' and hiked the price target to 4,900p from 3,800p, "as government programmes kick in". The broker said that given the rapidly moving macroeconomic backdrop, it has chosen a pair trade for its "best idea": long Ashtead, short Ferguson. "The two are both fantastic companies with strong balance sheets, high returns and leading market positions. They are both gaining market share year after year, organically, boosted by bolt-ons. "We prefer Ashtead as it is overweight in commercial and infrastructure building in the US, where any cyclical weakness will be offset by help from mega-projects and US government largesse. "Ferguson is overweight residential construction (54% sales) which is weakening rapidly," it said adding that valuations are low for both. Liberum noted that Ashtead's shares have de-rated from 28x forward earnings to 13x as the market's appetite for growth and cyclicals has weakened. "Ashtead appears to have been punished for both characteristics," it said "During its de-rating, earnings estimates have improved by around 18%. Delivery of earnings in line with estimates should drive improved valuation from lows, while its growth characteristics might become more valuable if bond yields stabilise." Liberum said the shares are quite sensitive towards confidence in US economic growth, "perhaps wrongly if the long pipeline of mega-projects in US non-residential construction does offset any cyclical decline in the coming year".

[bracke] 07/10/2022 18:18

fenners

I now understand what you are saying.

I have been unable to find a chart with the AHT share price shown in US $. To adjust the £ to $ would be a long job. Thinking round the problem I show below the AHT chart with URI comparison line. AHT and URI price actions are generally similar. I'm not sure if this answers your query but my reasoning is that URI line is the result of a $ chart and is similar to AHT which suggests to me that £/$ rate will not greatly affect my original thoughts.

AHT/URI Comparison Daily Chart

[fenners66] 07/10/2022 17:40

bracke maybe I'll try again.

You are looking at charts and previous lows to assess where AHT may be going.
Chart in GBP as is the share price.
But the majority of the business , cash flow, profitability is in the US.
So I put it to you, do the chart either with a US quote - are the ADR's ? - or translated into US $ at the actual exchange rates then
Re calculate that same low with the exchange rate now , what happens ?

[disc0dave45] 07/10/2022 17:13

Good evening Mr bLooks like "less joy" :(

[bracke] 07/10/2022 13:17

Good day fenners

Hmmmm.....I think I understand what you are saying. You are using the £/$ rate to assess the theoretical share price or something like that . I will have to pass on that.

NFP today. Expectation is a fall from last months 315k to 250k which the market will like. If lower even more joy, if above less joy.

[fenners66] 07/10/2022 12:11

bracke - FED tightening is why we are discussing the "low" not the mean or high.

FED was expected to hike last time we hit the low but the £ has fallen so far since then , meaning is US $ terms we are still as low , but in £ we aren't

[bracke] 07/10/2022 12:00

Good day disc0

Yes it used to be said that the market looks forward a year. I don't see much evidence of it these days.

As I stated in my posts much depends how determined the FED is to take inflation to 2% and how many rate rises are required to achieve it.

There is another aspect to consider. Once the FED decide enough is enough whether that be 2%, 3% or whatever they are unlikely to start lowering the interest rate immediately, doing so would undo what they had down. A period of inflation stability will be required.

I agree nothing is certain either from the FED or the US Government......Oh! and of course Mr Putin. I nearly forgot him!

I should make it clear I am not short or long AHT. All my trades are usually completed within a day, rarely holding overnight and rarer still holding over a weekend.

[disc0dave45] 06/10/2022 18:57

Mr b
Thanks for your explanation, wouldn’t question your experience or guru status!…..but a drop to 29 is a further 11% below the June low of 3269, has the market decided not to look forward anymore?!, particularly with regards to the FED’s stated targets, so I’m hoping you are wrong and the 52w was us already in the past.
The 60 year average inflation for the US is 3.2% per year, the 10 year average is 2.2%, so when / if the FED shifts it’s target everyone else will follow….itR17;s no surprise that the BoE and ECB also have a 2% target for inflation with each adopting varying strategies with regards to interest rates - nothings certain and it’s all guesswork :)

[bracke] 06/10/2022 17:58

Good day fenners

I understand your logic but as the FED actions bite harder I am not convinced that the share price will be protected by the exchange rate.

As I stated in my post my reasoning is based on the FED continuing with their stated path.

The last US inflation figure for the year ending 31 August 2022 was 8.3%. If 2.0% is to be achieved it indicates some way to go.

[bracke] 06/10/2022 17:45

disc0

The "fair probability" comment is based on the Fed rate rises and QT which the FED have said they are committed to. Such action will not be to the market's liking and will result in lower SPs'

Over the years experience and observation shows that when an share price drops it does like to test the low. Looking at the chart below the last low was at the s/r zone 3713 which would be the first test. Based on the paragraph above my thought is that it will not support and the share price will continue down to test 3260

I consider the foregoing is not entirely subjective but has a fair measure of objectivity based on experience.

If you think the share price will not do as I suggest it will have to be unaffected by the FED actions or that they will have minimal affect.

AHT DAILY

[fenners66] 06/10/2022 14:58

bracke surely the "value" of those lows , moves up say 20% as AHT now report in $ and the share price in £ , the £ having fallen about 20% ?

That of course disregards all the other levers on earnings and share price

[disc0dave45] 06/10/2022 14:57

Thanks Mrb, can you expand on:"As a minimum there is a fair probability that the share price will test the low at 3260 and 2900 is not much further on."I'm interested to understand is if your "fair probability" is based on TA signals or a pure subjective opinion leaning (as you tend to) towards negativity?. In other words has TA anything to do with filling the much lower gap that you mention - other than it's a gap, which aren't always filled.

[bracke] 06/10/2022 14:38

disc0

"I’m hoping you mean the 4122, not the next lowest!"
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Unfortunately not. My reasoning:

1 The current economic climate doesn't suggest improvement rather the opposite. Even allowing for a Santa Rally.....assuming there will be one this year.

2 As a minimum there is a fair probability that the share price will test the low at 3260 and 2900 is not much further on.

It's interesting to note that 2900 would still be above the pre pandemic share price

My reasoning is based on the FED continuing with interest rate increases and quantitative tightening. However if the FED get 'cold feet' because of a market meltdown as Bank of England did following the mini budget; all bets are off.

There are those who think that the FED will have to cease the tightening before reaching 2% inflation and will have to settle for less but really more.....you know what I mean.

Isn't it great to live in interesting times.

[disc0dave45] 06/10/2022 11:43

Good morning Mr b...."but I suspected the probability is the one at the bottom is likely to fill first."I'm hoping you mean the 4122, not the next lowest!

[bracke] 06/10/2022 11:25

Good day disc0

Yes the market likes to fill a gap. There is good and bad on the gap front. Gaps shown on the chart below are dashed blue. All being well the two at the top will eventually be filled but I suspected the probability is the one at the bottom is likely to fill first.

AHT DAILY

[disc0dave45] 05/10/2022 19:05

Good evening Mr bThanks for the pretty chart....these pesky gaps!

[bracke] 05/10/2022 11:34

The gap at 4213 filled but one opened to the downside at 4122.

The share price is ranging between fib levels and is being resisted at the 23.6%. This level has been a strong s/r level in the past and is likely to require a strong push to move and hold above it.

AHT DAILY

[palwing32] 30/9/2022 13:00

Every cloud?

[bracke] 30/9/2022 12:52

Viewing the 3 month chart above on the occasions it has dropped to 4000 and threatened to drop lower it was supported; until last Friday when support failed. Since then it has gradually been pulled back up from the 3713 zone with rising volume and a 'slug' of 2.5 million to get it over the line.


AHT DAILY

[fenners66] 30/9/2022 08:23

Well the company have said in the past that these weather events lead to increased demand for their services and a boost to trading.

Now we have the possibility of the same hurricane making landfall again and causing more damage.

It has previously been written up as a non-recurring trading boost.
We have to wonder if climate change is now making these events more like the norm.

My guess is that some of the share price performance reflects the additional future business.

[bracke] 29/9/2022 16:27

Such concern and helpfulness.

You'r all heart fenners!

[fenners66] 29/9/2022 15:32

I have seen estimates of the cost of the Florida hurricane ranging from $70 -260bn

I trust Sunbelt will be able to help when things have settled down.

[bracke] 28/9/2022 18:04

Good day disc0


"I don’t think after 3 weeks anyone can make any judgement on a persons capabilities"
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Perhaps not but it is hardly an auspicious start!

The nation must hope that he has a cunning plan that ends better than Baldrik's otherwise we are going to be in deep, deep trouble.

I was disappointed with trt's latest crystal ball reading. I thought he would have gone the 'whole hog' with 3200. Perhaps he should give the ball a polish.

[godwin2] 28/9/2022 14:05

I agree that the buy backs have had little effect despite going on for a long time,
But thanks for that analysis