We have always liked Ashtead (AHT) as a business but the shares seemed to be on never-ending upward path, so when the opportunity arises – as it has this week – to buy shares on a rare setback, investors should seize the chance.

Ashtead, which has an exceptional track record for dividend growth, rents a full range of more than a million pieces of construction and industrial equipment to a wide base of more than 800,000 separate customers.

Most of its business is in the US and Canada, where its Sunbelt brand rents kit to the non-residential construction market as well as providing emergency response in states like Florida which are regularly hit by storms and floods.

Over the last three months, however, its disaster relief activities have been lower than last year due to a ‘significantly quieter hurricane season’ and fewer other natural disaster like wildfires.

In addition, the prolonged Hollywood writers’ and actors’ strikes have impacted rentals to the firm’s film and TV customers in Canada with some impact on other parts of the business.

As a result, group and US rental revenues are seen growing between 11% and 13%, modestly below the previous guidance of 13% to 16%, meaning EBITDA (earnings before interest, tax, depreciation and amortisation) will be 2% to 3% below market expectations.

Add to that a higher depreciation charge and higher interest costs and pre-tax profit will be lower than the $2.1 billion forecast by the market.

Despite this temporary setback, the firm says its end markets in North America ‘remain robust, supported in the US by an increasing number of mega projects and recent legislative acts’ which are boosting spending on infrastructure and environmental programmes.

In other words, if you can look past this short-term disappointment, which is due to events beyond management’s control, this is still a growth market supported by government spending and regulatory drivers with Ashtead set to be a major beneficiary. What would prompt more concern is any sign of a pronounced slowdown in US infrastructure or construction spend and we will remain watchful of this possibility.

The firm continues to invest in its own business and in M&A buying up small local competitors and integrating them (and their customers) into its network which adds to underlying growth.

With the stock clobbered by more than 12%, knocking over £2.5 billion off the firm’s market cap, this is the cheapest level to buy into one of the UK’s greatest growth compounders in around a year.

The market may want reserve judgement on the company until it publishes its first half results on 5 December, but assuming there is no more bad news we see the shares getting back on the conveyor belt and resuming their upward trend.

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