The Investment column: Aggreko

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The Independent Online
AGGREKO, which supplies the power generators to illuminate America's grid-iron football Super Bowl, hit a new high yesterday as it delivered an upbeat assessment of its prospects.

The group has always claimed that its attraction is the globally diversified nature of its business renting power generators, cooling system and compressed air systems. Last year, however, the market feared global meltdown and the shares nosedived to 136p. They have since doubled. Can their recovery be sustained?

There's no doubting the strength of Aggreko's business. It has organised its operations outside Europe and the US into a single unit, which saw operating profits climb by 56 per cent in the half year, compared with 12 per cent in the core Western markets. That rate of growth should slow as the unit's profits grow. Aggreko's annual pounds 80m investment is going on portable kit to be used anywhere. It is only opening more depots in North America and Europe; the start-up costs knocked margins back a digit in the first half.

Strong results despite clients in recently-troubled petrochemicals highlight that the group is diversified across business sectors as well - it also serves the construction and entertainment industries.

Analysts expect full-year pre-tax profits of pounds 46.5m and earnings of 11.1p per share, putting the shares, at 266.5p, on a forward p/e of 24. Aggreko is indeed a cracking business but that's a fancy rating and investors should take some profits.

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