Market Report: Ashtead gains on back of cost base and US strength

Hopes that a reduction in costs during the downturn will help them in the recovery boosted the equipment rental companies yesterday and resulted in Ashtead bagging the top spot on the FTSE 250.

The hire group was driven up 8.8p to 166.1p after Singer Capital Markets released a bullish note on the sector in which its analyst Andy Murphy predicted an "elongated upgrade cycle".

Choosing Ashtead as one of his preferred companies, Mr Murphy said he has "considerable confidence that [it] will deliver profits ahead of expectations." One of his reasons for being so positive, he said, was the group's strong position in the US plus the fact that its "reshaped cost base implies a profitable operation in depressed markets".

The analyst also singled out Lavendon for special praise, describing it as "well set to benefit from a number of positive trends", and the small-cap firm added 6p to close on 113.5p.

Early signs were promising on the FTSE 100, which would have registered a two-and-a-half year high if it had held on to its early gains. However negative initial trading on Wall Street and worries over the eurozone led it to drop 1.06 points to 5,881.12.

City Index's Joshua Raymond noted that investors were scaling down "the amount of risky asset classes they held in their portfolios" in what he described as preparation "for an expected leave of absence from the markets, with traders starting to think more about their Christmas shopping than stock investment".

The news that BP is being sued by the US government over the Gulf of Mexico oil spill hit the oil giant yesterday, with many worried that it could significantly increase the financial cost of the disaster to the company.

Evolution Securities' analysts said the announcement was "hardly a surprise" and that it expected a fine "at the lower end of the range" of $4bn to $5bn. Still, despite the broker's calming words, BP dropped 6.55p to close on 470p.

One of the major risers of the day was GKN, which was once again being gossiped about as a potential takeover target. Despite the talk being rather vague, with no names or prices being mentioned, the engineering group gained 6.3p to 213.8p.

There was also the return of speculation around Cobham, which was doing the rounds last week, but it failed to catch alight and the defence company edged down 0.5p on 205.5p.

Serco topped the blue-chip index, making 23.5p to 597p after its trading update. The outsourcer said it is still set to meet its guidance for 2010, which includes "strong organic revenue growth", although Panmure Gordon's Andy Brown kept it as a "sell".

Burberry was looking smart, rising 16p to 3,215p, despite having its credentials as a takeover target knocked. The upmarket clothing retailer is a regular subject of rumours over a potential approach, with LVMH, Coach and PPR a few of the names recently mentioned as taking a look.

However, H2O Markets' Daniel Harris said its market capitalisation of nearly £5bn "makes it too expensive for a predator". Still, Mr Harris recommended it as a "buy", thanks in part to the ongoing boost from the continued speculation as well as Burberry's plans for expansion.

On the the mid-tier index SportsDirect was going strong, adding 4.5p to 150.5p. With recent talk over how adverse weather conditions have hit the retail sector, the sportswear company's first-half results rather went against the grain. The group said that instead of putting off shoppers, the recent cold snap had actually resulted in a boost of sales of its winter products.

The rest of the figures were generally good, with pretax underlying profit increasing nearly £29m from the previous year as it reached £100.7m, and Seymour Pierce's Freddie George kept it as a "buy".

There were plenty of questions floating around Kesa Electricals, after the revelation that Knight Vinke hadincreased its stake in the owner of the Comet chain of electrical stores to 11.09 per cent.

Speculation has been rife over the activist investor's intentions, revolving around whether a break-up of Kesa could be on the cards. One trader said that "everyone is waiting for anannouncement" as Kesa failed to move much either way, making a slight shift up of 0.8p to 166.7p.

On the Alternative Investment Market, there was a drop of nearly 18 per cent for Cohort, as the defence technology company shed 16p to 73.5p. The slide was prompted by the group'sinterim results, in which it warned that full-year pre-tax profits will fail to reach expectations.

Also down after releasing interims was Provexis, which develops dietary supplements among a number of other products. It was certainly not in fighting fit shape yesterday, dipping 0.53p to 4.15p as it revealed that its pre-tax losses had nearly doubled. The group blamed the fall on the fact that it has dramatically increased the amount it spends on research and development.

Suggested Topics
Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week