the Investment Column: Hanson

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The Independent Online

HANSON now bears almost no relation to the 1980s corporate predator from which it sprang. But the building materials group does have some elements in common with the earlier of the 1970s. It's still a market favourite. The City shrugged off yesterday's trading statement that said profits would be held back by the ending of a waste contract and the closure of one of 's plants, and the shares gained 7.5p to 614p.

The second similarity is its tendency to buy US rivals. Last month it completed the purchase of Jannock, the second-largest US brick maker, for pounds 159.7m; brick companies were 's biggest acquisitions in the early 1970s.

The group, valued at more than pounds 4bn, has strong cash flow and little debt, allowing it to spend another pounds 1bn on acquisitions, probably in the US.

The US government has pledged to spend $167bn (pounds 104m) over six years renewing the road network. is already the third-largest building materials producer in the US, giving it huge potential to benefit from the plan.

Analysts believe the market has still to price in this potential. On forecast earnings per share of 34.8p, is on a forward p/e of 17.5. That's a premium to the sector average of 14, but given its potential the shares are looking good value.