Specialist engineering company Halma (HLMA) demonstrated its unerring dependability with its latest full-year results on 13 June.

For the uninitiated, Halma is a global manufacturer of safety, health and environmental technology products. It employs around 6,000 people in roughly 50 individual small- to medium-sized enterprises, and operates across more than 20 countries.

It has a pretty vast product portfolio that includes things like radiation hazard detectors, water quality monitors and fire safety kits and sensors.

By operating in these areas it can tap into non-discretionary spending often backed by regulatory and legislative drivers.

This has enabled it to put up more than 20 years of dividend growth and, apart from 2021 when the company felt an impact from pandemic, earnings growth across a similar timeframe too.

Halma shares are not cheap – trading on a price to earnings ratio of nearly 30 times. Yet that’s often been the case and the only time investors would have been really caught out by buying at a premium price is in the latter half of 2021, with the stock yet to reach the highs above £30 it attained then.

Beyond that debate it’s a reminder that for all the criticism thrown the way of the UK market for its lack of breadth and quality, it does have some really excellent niche engineering businesses which have been rewarded by the market with premium valuations. The table shows several of them with a brief description of what they do.

Because these companies operate in specialist areas they are typically less exposed to the cyclicality which industrial firms experience and, while these are not technology companies per se (the lack of tech another thing thrown at London’s stock market), they often operate at the cutting edge of their specific area of expertise.

Disclaimer: The editor (Ian Conway) owns shares in Halma

‹ Previous2024-06-20Next ›