Chief Executive Geoff Drabble said he now anticipated full-year results ahead of previous expectations, without giving a figure. Liberum analysts raised their full-year pretax profit forecast by 4 percent to £445.4 million pounds.

"What we are seeing is good end markets, good market share gains from existing stores and a really good pipeline of structural opportunity from bolt-ons and greenfields. Those three elements combined is what is driving our topline," Drabble told Reuters.

The company also increased its forecast for capital expenditure to a range of 825 million to 875 million pounds.

Drabble said he aimed to invest the whole sum in the company's fleet of machinery and tools to meet increasing demand for construction equipment fuelled by a recovery in the market.

Ashtead's fleet in the United States is worth $3.9 billion and in the Britain is worth around 492 million pounds.

Drabble said he planned to spend just over 100 million pounds this year on acquisitions - in addition to the company's investment in fleet.

"Last year, we spent about 100 million pounds. If I was a betting person, we will spend a bit more than that," he said.

The company, which rents everything from small tools to large diggers and water pumps, said pretax profit rose to 120 million pounds for the three months to July 31 from 99.5 million a year earlier.

Shares in the firm, worth 88 pence four years ago, were up 2.9 percent at 1,015 pence by 09:15 a.m BST, making it the biggest gainer on the FTSE 100 <.FTSE> index.

"Ashtead still shows no sign of slowing down on an underlying basis," said Liberum, which has a "buy" rating on the stock.

"As recovery continues, Ashtead's financing structure and younger fleet base provides a competitive advantage, which should support continued premium growth. Forecast earnings growth is strong, upgrade momentum seems likely to continue and return on capital keeps improving," they added.

Ashtead, which makes 85 percent of its revenue from U.S. division Sunbelt, said rental revenue from the division rose 22 percent in the first quarter. Its British business, A-Plant, grew by 19 percent.

Construction spending in the United States increased 1.8 percent in July to a 5-1/2-year high, according to a report by the U.S. Commerce Department.

In Britain, construction output grew at its fastest in seven months in August, industry data showed on Tuesday.

"In both economies, it’s clearly a recovering market," said Drabble. This late spring and summer, it's gotten tangibly better. I think everyone is having to recognise just how strong it is," he added.

(Story refiled to correct reporting period in ninth paragraph)

(Reporting by Li-mei Hoang; editing by Kate Holton and Tom Pfeiffer)

By Li-mei Hoang