Ashtead Group (OTCPK:ASHTY) has already accomplished a lot, as its U.S. equipment rental business Sunbelt dramatically outgrew the underlying market over the last decade or so, expanding more than 4x during a turbulent time for the overall market. Management has more in mind, though, as it believes it can eventually hold mid-teens share of a substantially larger market, as more construction companies turn to rental/leasing and as the company adds stores and bulks up in areas outside of core construction equipment rental.
Although Ashtead shares haven't done all that well year-to-date next to rivals like United Rentals (NYSE:URI) or Hertz (NYSE:HTZ), the shares are still up about 70% over the past year, with the shares up about a third since the U.S. Presidential election. Investors have already assumed a lot in regards to infrastructure stimulus and tax reform, and it is hard for me to argue that the shares are significantly undervalued on a cash flow basis. That said, management has shown an uncanny ability to grow the business and federal stimulus could stretch the company's prospects and create more M&A opportunities.
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Ambitious Ashtead Looking To Disrupt Equipment Rental Even Further