MIDAS SHARE TIPS UPDATE: Speedy Hire’s rapid recovery

Ever since the first lockdown, there has been a marked increase in the sweet sound of birdsong in parks and gardens across the country. It is not the only noise to permeate our streets however. Day in, day out, the sound of building works can be heard, as housebuilders set to work, homeowners refurbish their properties and companies refashion their offices. 

The constant drilling, banging and bashing can be infuriating for those in search of peace and quiet, particularly over a Bank Holiday, but it is music to the ears of Russell Down, chief executive of Speedy Hire. 

When Down was appointed chief executive of the equipment rental group in July 2015, the company was in a bit of a mess. Having joined as finance director just five months earlier, he was promoted to the top job after his boss issued a sudden profit warning, sending the shares down almost 30 per cent to 51p. At that time, Speedy Hire needed a thorough overhaul. Today, the firm seems to be firmly back on its feet. Speedy Hire rents out hundreds of thousands of products from traffic cones to massive machines. Operating from 200 depots across the country, the company works with 87 of the top 100 construction firms in Britain, but customers also include thousands of one-man firms. 

DIY enthusiasts can even rent Speedy kit from 16 B&Q stores and the number should pick up in time. 

Under Down’s stewardship, Speedy has started using technology to up its game and make sure that the equipment customers want is in the right location at the right time – and that it is ready to use. Some three-quarters of all its business is done by delivery and the firm now guarantees that any of its top 350 products can be delivered to customers, wherever they are in the country, within four hours. 

This pledge has helped Speedy gain market share, driving rental levels up more than 30 per cent compared with where they were when Down joined. 

Most large construction firms are keen to improve their environmental credentials and Speedy is helping them, with solar-powered kit, lights that run on battery rather than diesel and even hydrogenated vegetable oil as a zero-carbon replacement for diesel. 

Brokers are enthusiastic about Speedy. Covid-19 affected sales last year, but the business has recovered strongly since then and results for the year to March 31, out later this month, should engender confidence. 

Dividends, suspended last year, should be reinstated, a troublesome Middle East subsidiary has been sold and Down is actively looking for acquisitions in niche areas such as specialist hire and equipment testing.

Midas verdict: Speedy Hire has been a roller-coaster investment. Midas recommended the shares at 70p in February 2015, watched them tumble by the summer and suggested that investors hold their nerve as Down took the reins. The stock has been as low as 30p since then, but reached almost 80p in January 2020, before Covid nerves sent the price down again. Looking ahead, prospects seem much brighter. Existing investors should hold. New investors could even buy into the stock at the 76p price. 

Traded on: Main market Ticker: SDY Contact: speedyservices.com or 0800 500 3993