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A FTSE 100 bargain for growth and dividend investors

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In my opinion Ashtead Group (LSE: AHT) is a bargain-basement share that could make investors very rich in the years ahead.

The US economy is going from strength to strength, driving demand for the Footsie star’s rental equipment. At Sunbelt — its Stateside division that sources more than nine-tenths of overall profit — sales boomed 15% during July-September.

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And demand for Ashtead’s services is likely to keep increasing as infrastructure spending across the globe clicks higher, whilst the company’s insatiable appetite for bolt-on acquisitions should also keep trade rolling in.

Stateside star

Ashtead has a brilliant record of throwing out double-digit earnings improvements year after year, and with market conditions improving in its most important territory, City analysts do not see this trend ceasing any time soon.

In the current year ending April 2018 the Footsie star is expected to generate a 16% bottom line improvement, and it is anticipated to follow this with an extra 12% rise in fiscal 2019.

Despite its exceptional profits history and strong outlook, however, Ashtead can still be picked up for a song. Whilst a forward P/E ratio of 16.4 times may nudge ahead of the widely-accepted value benchmark of 15 times, a PEG reading of 1 suggests that the rentals giant is in fact a bargain.

Meanwhile, there is plenty for income seekers to set their teeth into, Ashtead is expected to keep its ultra-progressive dividend policy in business. It hiked the dividend 22% last year to 27.5p per share, and more chunky increases — to 31.3p and 34.8p this year and next — are forecast. These projections yield a handy 1.6% and 1.8%.

Build a fortune

Those on the hunt for great growth and dividend shares for a small price should also give MJ Gleeson (LSE: GLE) a close look today.

The massive housing shortage in the UK means that firms across Britain’s housebuilding sector continue to deliver brilliant profits growth, such is the clamour for new-build properties. And MJ Gleeson was the latest such business to underline the positive market backdrop earlier this week.

It advised that the “increasing number of sales outlets, combined with very strong customer demand in all regions, good mortgage availability and attractive levels of affordability means that the outlook for the division remains very positive.”

The division has hiked the number of sales outlets to 58 from 50 at the same time last year, and it has plans for 70 by the middle of next year. A strong forward order book at the end of November, standing more than 30% higher year-on-year, underlines that the business is right to be optimistic.

Indeed, the number crunchers are expecting MJ Gleeson, which also has a knack of grinding out brilliant profits growth year after year, to throw out another 9% earnings rise in the year ending June 2018. And this estimate leaves it changing hands on a mere prospective P/E rating of 14.7 times.

The solid outlook for the housing market should also keep dividends growing at a healthy rate, too, and for this year a 26p per share payout is predicted, up from 24p last year and leaving a 3.5% yield.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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