MIDAS SHARE TIPS UPDATE: VP's tool hire service is growing

Renting out tools and equipment can be a difficult business and the stock market is littered with firms which have struggled in recent years. VP is not one of them.

The group has consistently improved results over the past five years and the shares have risen in sync.

Midas first recommended VP in 2012, when the stock was 304p. By 2015, the price had risen to 617p and today the shares are 860p, after the company announced last week that it was buying fellow hire firm Brandon for £69 million. 

Growth story: VP has consistently improved results over the past five years and the shares have risen in sync

The deal, financed with bank debt, should help VP to grow even faster over the next few years.

VP focuses on hiring out kit to large companies, while Brandon’s customers tend to be smaller firms, so the businesses are complementary. 

VP should also be able to secure better deals from suppliers. Brokers now expect profits up 10 per cent to £38.5 million for the year to March 2018, rising to more than £47 million the year after. 

A dividend of 24p is pencilled in for next year, rising to 27p.

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November 14, 2017

Sources:` Daily Mail

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