AIM listed company Breedon Aggregates is the UK’s largest independent aggregates business, operating around 60 quarries, 27 asphalt plants, 170 ready-mixed concrete plants, two cement import terminals and three concrete block plants. We have long been fans of the group and are opting for it as stock tip for this week as investors are potentially offered a better entry point given the fall back since reaching an all-time high in August.

As most drivers will be only too aware, spending on road repairs has hardly been top of the agenda for hard-pressed local councils. In fact, infrastructure spend overall has been sluggish, despite politicians recognising the part this could play in any economic recovery. Breedon provide various aggregates to the construction and building industry and would be a direct beneficiary of increased infrastructure spending, which the group are expecting to grow over the next two years.

The company has been positioning itself to benefit from any pick-up in the economy and demand for its products, leading to a number of acquisitions, the latest in December for four quarries and an asphalt plant. These acquisitions have helped expand the company’s geographical presence in the UK and management expect a significant and improving contribution to come from the acquisitions. This is important as the majority of customers will be local to the sites.

Much of the group’s growth has come from housing and a cyclical market demand for new housing remains. This is an AIM listed company that is geared to a recovery in infrastructure spend and we currently recommend Breedon Aggregates as a ‘buy’ for medium to high risk investors.