Shares are on the march at our infrastructure tip Hill & Smith as interim profits soar by 28%
HILL & Smith has an international business focused on several fast-growing sectors, including upgrading UK roads, modernising US energy plants and creating security structures for highprofile events such as Trooping the Colour.
Midas recommended the shares exactly two years ago, when they were 549p. Since then, they have more than doubled to 1185p, as both the UK and US governments have pledged to spend billions upgrading national infrastructure.
In Britain, annual spending on roads is predicted to rise from £1billion to more than £3billion between now and 2020. Hill & Smith, based in Solihull, West Midlands, specialises in motorway messages that warn drivers about problems and temporary barriers that infuriate motorists in a hurry.
It also makes handrails, flooring and other products for energy and water plants, including ultra-durable support structures. This business is particularly strong in the US, where utility sites are ageing.
The firm recently moved into the security business too, creating temporary constructions designed to stop terrorists driving vehicles through popular events, as happened in Nice on July 14.
Chief executive Derek Muir joined the business as a sales engineer 28 years ago and has run the group since 2007. Profits and dividends have grown steadily under him and are likely to continue in the same vein. Last week, the group unveiled a 28 per cent leap in interim pre-tax profits to £31.7million and a 20 per cent rise in the dividend to 8.5p. Analysts expect full-year profits for 2016 to grow by 22 per cent to £65million with the dividend up more than 17 per cent to 24.3p. Further growth is pencilled in for the next two years as well.
Midas verdict: Hill & Smith shares have done well but the stock is likely to deliver further gains. Existing investors should hold. Others could take a long-term punt.
Traded on: Main market Ticker: HILS Contact: hsholdings.co.uk or 0121 704 7430