This is #5 in our "Twelve Stocks of Christmas 2025" Series. You can review the full set here.
The Pitch
ZIGUP (LON:ZIG) is the largest provider of van hire by fleet size in the UK, Ireland and Spain. It’s been in business under the Northgate rental brand since 1981, but the group expanded its remit in 2020 when it merged with the Redde claims management business – also previously listed on the LSE.
The benefits of combining these two businesses was never entirely clear. Zigup’s management now seem to have accepted this view and are restructuring the group into two separate operating businesses, focused on Rental and Repair. This should give the rental business the chance to shine, perhaps also flushing out any potential buyers for the Repair division.
With ZIGUP stock trading at a c.20% discount to book value and boasting a StockRank of 96, there's an opportunity for a re-rating if the company can deliver promised improvements in cash flow and profitability. In the meantime, the shares offer a well-supported 7% dividend yield, providing a nice total return opportunity.
The Big Picture
ZIGUP’s market leadership and deep sector expertise has made it a surprisingly reliable performer. The company controls the whole van rental value chain, from sourcing direct from suppliers through to retailing its own ex-fleet vans. In between, Northgate offers a range of hire and lease options that hit the sweet spot for the growing number of fleet operators who don’t want to own and manage their own vehicles.
The company has undoubtedly benefited from changing structural trends in vehicle ownership. Northgate had 135,000 vehicles on the road at the end of October 2025, with a book value of almost £1.7bn.
Why this works: a large, well-run hire fleet can generate reliable cash flows and decent returns on capital employed. Northgate has a track record of doing this well and the company has been able to maintain or increase its dividend annually since 2012 (except 2020).
The uplift: the supply chain disruption of 2022 provided profitable opportunities for Northgate, which was able to source new vans. But there was also significant disruption to the company’s normal fleet replacement cycles. These are now starting to normalise, providing an opportunity for improved cash flow and perhaps slightly…
