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Health and Safety Giant Should Get Even Bigger as the World Becomes More Careful

By Malcolm Stacey | Tuesday 10 July 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Share Thunderers. There are some areas of business which look extremely healthy at the mo. Whereas others, like airlines for example, have outlooks which could be rather grim. In the former camp are companies which do health and safety.

We may like to laugh at some of the sillier rules in the safety game, but the fact is that governments all over the world are becoming more safety conscious. And they are insisting to the building and construction industries and others that changes, often expensive ones, must be made.

A company which will take advantage of this caution is Halma (HLMA), which is big enough to be in the Footsie. It covers a wide field. Here’s a list of what it does and it's by no means complete; Food and water quality control, smoke detectors, poisonous gas detectors, electronic alarms, water leakage monitors, lift safety measurers. It also provides gear to measure blood pressure and stuff to help prevent industrial accidents.

This equipment is not just supplied to Blighty, but around the world. And while the perception that other countries don't have the same standards of safety as we do is partly true, the gap is getting smaller all the time.

But just because a market is strong and becoming stronger doesn’t mean every company can monetise the opportunities. However, Halma can. Ever since 2003, profits have grown year on year.

With a record like that you can expect a lofty price/earnings multiple. And the forecast I have for that is 30. That’s much higher than my usual cut-off point, but in this case, the chance of higher profits fuelled by higher demand probably make up for that. This world is becoming more spooky about hazards at work and this is a company which specialises in that kind of thing. That makes it worth a look.

When you’re not in the Punter’s Return.

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