Equipment hire business Ashtead (AHT) is on track to beat full year expectations. This is thanks to a currency tailwind and plans to increase investment to capitalise continuing growth in the US.
Similarly, plumbing and heating specialist Wolseley (WOS) reveals its own forex boost and strong trading across the pond.
UNDER PRESSURE
Yet both stocks were down in early trading.
Ashtead paring earlier gains to trade down 1.2% at £15.27 at one point, and Wolseley is off 1.1% to £46.34. Shares in the former have recovered some strength and are now up 1.3% at £15.60, although short of highs earlier this morning of £15.92.
An old stock market saying argues it is ‘better to travel than arrive’ and both stocks have enjoyed strong runs in the last month thanks to a so-called ‘Trump bump’ linked to the President-elect’s promised $500m of infrastructure spend and as investors have priced in the benefits of sterling weakness against the dollar.
EXPECTING MORE
Against this backdrop the market was perhaps expecting more from Wolseley, in particular, than an in-line first quarter trading update.
Canaccord Genuity, which has a ‘hold’ recommendation on the stock and £46 price target, sums this up neatly: ‘Wolseley is benefiting from its high US exposure which is supporting profits but valuation looks to be pricing in this attractive exposure. All looks on track as expected.’
