Investment Column: Halma's premium valuation is deserved


Our view: hold

Share price: 418.5p (-8.2p)

When you're at work there's a good chance that equipment made by Halma, one of those under-reported British success stories, is what will keep you safe.

If you invest your money with the company, that should be pretty safe too, at least if the business continues down the path it has taken.

We tipped Halma, which provides a wide range of safety equipment including hazard detectors and sensors, as a buy at 275.5p in June. Since then, the shares have been rock-solid performers, more than justifying our faith.

The company's recent results provided further evidence of a business in rude health. Profits were up a fifth at £98m on revenues of £518m, up 13 per cent, while the dividend was raised by 7 per cent. Yesterday saw Halma sealing a £5.6m deal to buy Avo Photonics, a US company that makes advanced, miniaturised photonic components and will join Halma's health and analysis operations.

The company has promised more deals, but this shouldn't worry shareholders – it has focused on profitable, largely privately owned firms that can complement and enhance existing Halma businesses. Big, transformative transactions beloved of fee-chasing investment bankers, and few others, are not on the agenda.

With a rapidly growing Asian franchise – where fast-growing economies are increasingly paying heed to worker protection along Western lines – the signs all look good.

Trouble is, the market has well and truly woken up to the stock's attractions. In fact, at 15 times forecast full-year earnings, it now trades at a significant premium to its sector. Moreover, that premium is rising.

But while taking profits might be tempting, we think that would be a mistake. While the shares are probably fairly valued, Halma's fundamentals are solid, it has good growth prospects and its track record justifies a higher valuation than its peers'. This one will pay off for those who keep hold over the long term.


Our view: speculative buy

Share price: 14.5p (+0.25p)

Bglobal's share price has been under the cosh recently, and on the face of it you might ask why.

After all, the company yesterday announced that revenues for the year ending 31 March had more than doubled to £29m while an adjusted pre-tax loss of nearly £500,000 in the preceding year had morphed into a healthy £3.8m profit.

The issue is that this profit is likely to be a high point, at least for the next couple of years.

Bglobal provides smart energy meters. These are a good idea – they make the sporadic, and sometimes inaccurate, meter readings that consumers are used to a thing of the past.

Naturally, since being presented with such a no-brainer, the Government has been dragging its feet. A nationwide roll-out is now targeted for 2014 but analysts fear more delays. Which means energy providers have put their own plans on hold, making life difficult for Bglobal.

Happily, with efforts to bring new entrants into the energy market, there is an opportunity for the company to jump in and offer services such as billing, data collection, and the like.

It has already helped Co-op into the market and others could follow. Backing the shares now is risky, but they're cheap and the company is financially strong, with £4m in net cash at the bank. One for investors willing to speculate.

Dechra Pharmaceuticals

Our view: buy

Share price: 485.75p (-18.25p)

Dechra has been one of our favoured stocks for some time now, putting out good updates even as other companies battled with sluggish trends in the wider economy.

Yesterday was no different. The veterinary products group issued a trading update ahead of its full-year figures in September, with the board saying that "although economic conditions have had an impact on our markets, the group has performed in line with our expectations and made solid progress in the financial year."

The US business is performing strongly, net debt is down and group revenues are up. They are also up in Europe. Moreover, at under 14 times forward earnings for this year and around 11 times on the estimates for next year, the valuation also remains attractive. We said buy at 445p in September. Although the stock is up nicely since then, we're confident that there is more to come.

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
i100(and it's got nothing to do with the Great British Bake Off)
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
news It's not just the world that's a mess at the moment...
footballPremiership preview: All the talking points ahead of this weekend's matches
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
ebooksAn evocation of the conflict through the eyes of those who lived through it
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Mario Balotelli pictured in his Liverpool shirt for the first time
Life and Style
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Scientist (SQL,Data mining, data modelling, PHD, AI)

£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone