This week’s share of the week is Hill & Smith, a company that supplies a range of infrastructure and galvanizing products to customers in the UK and markets around the world, mainly the US, Australia, France, India and Thailand. Its range includes road safety barriers, pipe supports for the energy sector and coatings for fencing and structural steelwork.

Though the shares have underperformed so far this year, the recent trading update in November provoked a positive response, prompting the shares to trade on a 2019 p/e ratio of 13.9. That is attractively low relative to the group’s main peers.

The company said revenues in the third quarter had risen by 12% and the UK government had confirmed a 66% increase in funding for the next Road Investment Strategy, from 2020-25, amounting to £25.3bn. That is a real positive for the company’s UK operations. It said full year results were expected to be in line with market expectations.

The group offers an attractive dividend yield of 3.0% which is relatively good for the sector, although payouts will probably only rise modestly over the next few years.

While the company faces some challenges in relation to rising commodity prices and a more difficult environment in the UK, many of these appear short term in nature and most of its international businesses continue to trade well, so we continue to recommend the shares as a ‘buy’ for investors willing to accept a higher level of risk.