The step-up earlier this month by aggregates group Breedon (BREE) from the Alternative Investment Market to the London Stock Exchange’s main market is described by chief executive Rob Wood as “a significant moment in [the company’s] history”.
Tip style
Value
Risk rating
Medium
Timescale
Medium Term
Bull points
- Technical factors provide buying opportunity
- Has acquired for growth without straining balance sheet
- Vertically-integrated business model captures more margin
Bear points
- Earns a fifth of revenue from shrinking housing market
- Already a big player in a concentrated sector
Breedon had started quoted life on London’s junior market 15 years earlier as Marwyn Materials, having raised £13.6mn to buy stakes in building materials companies. It became Breedon in 2010, following a £160mn reverse takeover of a bunch of quarries and other assets owned by the former Ennstone business.