Venture: Small Cap Industrial
![Venture: Small Cap Industrial](/content/images/size/w1200/2023/11/venture-research-banner-2.jpg)
Issue 10;
A dirt cheap cyclical stock.
Speedy Hire (SDY)
Speedy Hire’s stated mission is:
“To be the most efficient and sustainable hire business in the UK and Ireland: digital and data driven, optimised through operational excellence and powered by our people.”
They basically rent out the many different machines you tend not to own. They have 68,000 customers and 3,375 staff, with most operations in the UK and Ireland, although they do have a joint venture in Kazakstan.
SDY is cyclical and dirt cheap. The shares have fallen around 70% since the pandemic despite the business managing to deliver growth. We have seen this before. Before the financial crisis in 2008, they had too much debt going into a recession, and business slumped. There was a discounted rights issue, but they survived. This time, debt is lower, and the company is delivering free cash flow. In the below chart, I show enterprise value to sales over 25 years.
Cyclical and Dirt Cheap
![](https://www.bytetree.com/content/images/2023/11/2023-11-17-venture-10-1.png)
SDY had a positive earnings revision with upgrades from the two active analysts at Peel Hunt and Liberum. The target price is 70p, which is twice the current price. There has been a steady stream of buying from insiders, and major shareholders include GAM, Aberforth, Polar, Dimensional and others. It’s a reassuring bunch.
The shares trade on 6.8x ’24 earnings, and the dividend yield is 7.3%. The balance sheet is okay, but if interest rates have peaked, then it will be in good shape.
Risk
Other than the pandemic and the slowdown in construction, the debt will have weighed on the price. A weaker economy is already priced in, and so the remaining risk is that rates haven’t peaked. I deem this to be high risk.
Venture Update
Gold is likely to break out before too long. The miners should do well.
![](https://www.bytetree.com/content/images/2023/11/2023-11-17-venture-10-2.png)
Please let me know your thoughts by emailing me at charlie.morris@bytetree.com or tweeting me @AtlasPulse.
Many thanks,
Charlie Morris
Editor, Venture
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