Hargreaves Services (AIM: HSP 483.5p)

Hargreaves Services was established in 1994 as a bulk haulier.

It has now grown through acquisition into the supply, movement and management of mineral resources, as well as providing support to the energy and waste services. Hargreaves resource and client base is mainly located within the UK and Europe.

It has a fleet of over 370 vehicles and moves more than 10 million tonnes of materials throughout the UK each year.

The share price has held up well compared to many AIM stocks but has been volatile of late. At its current share price, the stock stands on a modest 2009 prospective p/e ratio of 7.6x.

The group is split into six divisions.

Mineral Services: Which provides fuel products to a range of industrial wholesale and public sector energy consumers.

Support Services: Runs under the name Norac and provides contract management services to the power, utilities and minerals industry.

Maltby Colliery: Is one of the UK’s largest working deep mines and provides 1.2 million tonnes of coal a year supplying Drax power station among others.

Monckton Coke Works: Located close to Barnsley, produces coking coal for a number of customers across Europe for a variety of different applications from steel producers to domestic homes for heating.

Waste Services: This division operates a specialist fleet of vehicles to remove waste and, where possible, recycles materials that can be resold.

Transport services: Three hundred and seventy vehicles are used for specialist bulk haulage throughout a number of depots across the country.

Preliminary results for the period ending September 15 were impressive. Group revenue increased by 69 per cent to £404.9m (2007: £240.1m) and underlying operating profit increased to £23.6m (2007: £10.8m). Earnings per share increased by 77 per cent to 51.1p and net debt was £46..2m (2007: £56.9m). The company also increased the dividend to 10.3p.

The company is a multi-disciplined and well-integrated business that has delivered sustainable growth. The fact that it focuses on energy and waste sectors means that the company should be well insulated from recessionary factors.

They have a proven management team with a track record of executing and implementing acquisitions as well as moving forward organically.

The company has a blue-chip customer base, strong forward order book and has limited its exposure to commodity prices through forward selling and hedging.

The management owns 20 per cent of the company which adds further confidence. I consider the shares a buy.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.