Hill & Smith Barriers – A Cash Source

Street Lighting

Stalwarts of UK industry may not be sexy or sassy to the masses but their presence is ubiquitous and yet taken for granted by most passers-by, however without their services our lives would most certainly not run so smoothly.

Hill & Smith are one such stalwart with their omnipresent products serving the general public to good effect: products like street lighting columns, security fencing, road safety barriers, supports for general utilities infrastructure, railway platforms, bridge parapets and temporary car parks to name a few.

These products don’t necessarily rock most peoples’ boat but there is good money in them, especially in an improving economy. Hill & Smith have been regularly improving their financial standing since the financial crisis of 2007 – 2009 and have benefited from the dedication of UK Government policies in getting through the recession.

Hill & Smith shares are now approximately 40% higher than their pre-recession peak of circa 400p hit during the second half of 2007 and have plateaued in a consolidating range of 500p to 570p since November 2013, but the UK economy is improving all the time and these improvements may well presage a breakout of this range into new record high territory.

Fundamentals have been steady with debt, revenues and profits improving over the last year. Hill & Smith have strong standing in both America and UK which is placing them well in benefiting from the recovery both sides of the Atlantic and with looming elections in both of these western economies it seems unlikely that any rocking of financial boats will destabilise recovery policies.

Technically, buying Hill & Smith shares at the November nadir and holding through to the end of March has yielded an average return along the way of 33% since 2009 (assuming exact timing trough to peak each year within the respective years). A similar performance this year would be enough to propel Hill & Smith into new record high territory and set in place a breakout of the current trading range, itself usually a good precursor to further gains.

Hill & Smith does also have operations in France, which is causing a drag on financial performance and needs to be watched closely for any material effect on the share price. A break below 500p would set up a break out of the current trading range in a negative way, which in turn could see further falls below 500p.

Date Company Status Mid Price Target 1 Target 2 Target 3 Target 4
29/11/2014 Hill & Smith Initial write up £5.675 £6.45 £6.98 £8.16 £8.48

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