It’s not an ideal start as the firm prepares to float in the US. Ashtead shares will have dual-listing in New York and London from 2 March.

But it’s not all bad. For investors seeking cheap FTSE 100 stocks, this recent price weakness could be a fresh tasty dip-buying opportunity. So what makes the company a top value stock to consider?

Why did Ashtead shares fall?

First, let’s talk about why Ashtead shares have dropped again. On Wednesday (28 January), United Rentals (NYSE:URI) — the world’s largest rental equipment supplier — released disappointing trading numbers after Stateside markets closed. This prompted its FTSE rival to fall when the London market opened Thursday.

For Q4, United Rentals’ revenue was up 3% at $4.21bn, but below consensus forecasts of $4.24bn. With margins also being squeezed by inflationary pressures and rising costs, adjusted earnings missed estimates too — at $1.9bn. This was flat year on year and below expectations of $1.93bn.

Did Wednesday’s trading update warrant the sharp drop in United Rentals’ (and Ashtead’s) share price? Perhaps not, when taking into account United’s solid forecasts for 2026. Predicted revenue and adjusted earnings are tipped to rise 4%-7%, and 3%-7% respectively this year. These numbers were also in and around the midpoint of analyst expectations.

That said, Q4’s underwhelming numbers don’t help when worries over weak end markets and inflation and cost headwinds remain high. So perhaps a price drop wasn’t all that surprising.

What next?

Like United Rentals, Ashtead sources more than 90% of revenues from the States. And while it’s also gaining share, the firm’s struggled to grow sales more recently amid weak conditions in key end markets.

But could 2026 be a turning point for the company? It’s more than possible, in my view, leaving its year-to-date share price to suffer a bump in the road.

On one hand, the uncertain outlook for the US economy poses ongoing challenges for construction markets. However, revenues could pick up significantly if (as expected) interest rates in the US and elsewhere continue to fall. It’s also on course to win business from a number of major building projects this year and beyond.

A FTSE growth opportunity?

Indeed, Hargreaves Lansdown analysts have described its North American market as “real growth opportunity over the medium term [with] several growth drivers here“. The range from “the onshoring of supply chains, to government legislation looking to expand infrastructure and chip manufacturing“.

What’s more, a market recovery in 2026 could fuel fresh rounds of acquisitions using Ashtead’s significant cash flows. This could also help propel it back into red-hot growth stock territory.

At current prices, Ashtead’s share price commands a price-to-book (P/B) ratio of 3.4. That’s below the 10-year average of 4.6, and represents an attractive dip opportunity, in my view. It’s not without risk, but I think the FTSE 100 company’s worth serious consideration today.

The post After slumping last week, here’s a FTSE 100 value stock to consider! appeared first on The Twelfth Magpie.

And while the FTSE 100 is set to finish flat, that’s despite two double-digit peak-to-trough rallies in the year. And to top it all, the UK is now in a recession.

Nevertheless, I’m tuning out this noise and planning to add these three stocks to my portfolio in 2023.

Software giant now on sale

Wall Street took a dim view of Adobe (NASDAQ: ADBE) acquiring rival software company Figma for $20bn this year. The stock dived 17% after the acquisition was announced. Despite a rebound since, the shares are still down 40% year-to-date.

At first glance, the sell-off was entirely understandable, considering $20bn equates to paying 50 times Figma’s expected 2022 sales. And this remains a risk, to be sure.

But Figma is a rapidly-growing rival, its collaborative design platform competing directly with Adobe XD. And this is a fast-growing market, driven by an explosion in remote and hybrid working. This deal, which is due to close in 2023, would leave Adobe dominating the user interface design landscape.

The software giant was founded 40 years ago, but it remains as relevant as ever. A lot of the digital economy still runs on its tools and platforms, from Photoshop and PDF, to Illustrator, Acrobat, and Adobe Experience Cloud.

Proving this, Adobe last week reported record Q4 revenue of $4.5bn and fiscal 2022 revenue of $17.6bn. The firm generated a record $7.84bn in operating cash flows during the year. The company boasts an incredible 87% gross margin.

The stock is currently at the top of my buy list.

Building market share

Ashtead (LSE: AHT) is a company aiming to consolidate the fragmented industrial and construction equipment rental market. And it’s had success doing this so far. In fact, the firm is now only second to its US counterpart United Rentals (NYSE: URI) in the North American tool rental industry.

Yet both firms have less than a third of the total market between them. That leaves plenty of open space for consolidation. And that’s why I plan to buy both stocks.

Ashtead and United Rentals have made dozens of bolt-on acquisitions over the last few years. And this hoovering up of smaller competitors has left them in a commanding position. In fact, a duopoly looks to be forming in the European and North American construction equipment rental industry.

These markets are valued at over $84bn, according to Statista. This size is based on the fact that purchasing new operating equipment is very expensive. The option of equipment rental has offered more flexibility and greatly reduced equipment costs.

However, given that the US accounts for over 80% of Ashtead’s total group revenues, any prolonged recession there could threaten growth. That applies to United Rentals too.

Another risk is the amount of debt both firms have taken on to fund their acquisitions. Ashtead’s net debt now stands at over $8bn, while United Rentals debt is over $9bn. That could create challenges given rising interest rates.

Still, I think the long-term opportunity for both companies remains compelling.

The post 3 phenomenal stocks I’m buying for my Stocks & Shares ISA appeared first on The Twelfth Magpie.