MIDAS SHARE TIPS UPDATE: Steel supplier Hill & Smith in 172% rise

Buying spree: Alan Giddins

Hill & Smith is on a roll. Headquartered in Solihull, the group works in the US and over here, supplying a range of critical products for big infrastructure and energy projects, industrial buildings, roads and railways, as well as hotels, flats and homes.

The firm’s kit list is vast, including galvanised steel for bridges and power stations, safety barriers for motorways, solar generators for construction firms and highly durable material for dockside mooring stations.

Both in the UK and America, Hill & Smith is benefiting from a surge in spending on infrastructure, such as roads and electricity grids. Firms are also turning to Hill & Smith as they replace dirty diesel generators with solar-powered alternatives. Widespread demand helped the group deliver record trading in the first four months of this year, with revenues up 18 per cent and profits on course to be above market forecasts for 2023.

Analysts now expect full year sales of £860 million, up nearly 18 per cent on last year, with profits increasing 16 per cent to £102 million and the dividend rising 10 per cent to just over 38p.

Chairman Alan Giddins is optimistic – so much so that he has just spent £630,000 of his own money buying shares in the company. Giddins took charge in July last year, after chief executive Paul Simmons stepped down with immediate effect. The pace of growth has accelerated since then, driven by a strong performance from existing businesses and some canny acquisitions, such as solar lighting firm National Signal in California and Widnes Galvanising in Cheshire.

Further deals are likely, as Giddins seeks to build on the firm’s existing strengths and add new ones. The approach is tried and tested. Hill & Smith has a strong track record, fuelled by an entrepreneurial culture that pervades the entire workforce. The group has 21 subsidiaries and each is encouraged to operate quasi-independently, so they can be nimble and driven, even as they receive support from the parent company.

Midas verdict: Midas tipped Hill & Smith in 2014, when its shares were £5.49. Today, they are £14.92 with brokers suggesting the price could hit £17 over the next 12 months. Infrastructure improvements are top of the agenda here and in the US, with parties of every persuasion agreed that more should be spent on transport links, energy networks and digital connectivity. Hill & Smith is ideally placed to benefit from this trend and Giddins’ recent share purchase is a vote of confidence. A good, long-term investment. 

Traded on: Main market Ticker: HILS Contact: hsgroup.com or 0121 704 7430