halma market share water leak detection products

It’s a problem.īut the basic point is, these shares were all very expensive at the start of the consolidation phase. I do hold BVXP, but I’m not sure I’d buy at today’s prices, and the prospects for the medium term don’t look anything like as good to me today as they did say five years ago. I looked at Craneware, for example - I like the business, but it’s hard to see how the risk / reward adds up. It’s honestly still a problem for some of these companies. Then you’ll have a decent idea of what returns to expect. am I likely to suffer multiple contraction?.how fast can this thing realistically grow at over the medium to long term?.what’s the earnings (or FCF, or whatever) yield I’m getting when I buy?.Even for a high return on capital business, something that’s on a P/E of 30x has to grow consistently at over 7% a year to get you a 10% or greater return (I say over, because it’s rare for a business to sustain a 30x P/E indefinitely - it can only really happen if it’s growing very quickly). But as soon as you start buying businesses with P/Es materially greater than 20, the maths of actually earning good returns (other than speculatively) just gets quite unforgiving. I think of myself as someone who invests in quality businesses (or tries to) and I think cheapness can be a trap. And if it does keep on getting more expensive, then future returns keep getting worse. The only way it can happen is if it keeps on getting more and more expensive. It’s just very hard for a share that is very expensive and has slowing growth to do well over the medium term. Quite a few of them are still very expensive now, too, which indicates another problem a number of them seem to have - slowing growth, whether actual or feared. That’s just very rough looking at the data on SharelockHolmes - so, it won’t be properly correct, but the basic point is, these shares were all very expensive at the start of the consolidation phase. Here are the (rough) P/Es of these shares at the start of the “consolidation” phase you identify: I think it’s largely a valuation thing to be honest. Not much worse in the market than holding onto a highly-rated quality name that loses its quality and premium rating.

The share prices may even reflect that possibility that the best days of these companies have been and gone. Happy to hold on and be patient? Frustrated watching other shares moving higher while yours go sideways? About to sell and reinvest into something that has more immediate upside? I plan to keep holding Bioventix, but wonder what the views are from anyone else holding the shares above. But I suspect the sideways movements of these shares are not what holders have become accustomed to after some superb gains in the preceding years. True, the pandemic will have affected these businesses to some degree (positively and negatively). James Halstead is also almost back to a level seen five years ago:įever-Tree is at a level seen four years ago:Ĭraneware is at a level seen three years ago:Īnd Boohoo is almost back to a level seen four years ago: Hargreaves Lansdown is almost back to a level first seen five years ago:

Its price is presently at a level first seen two years ago:Ī few other ‘quality’ names are in the same boat.

Investing for ten years undoubtedly involves watching prices tread water for long periods.”Īs well as FW Thorpe, another of my shares, Bioventix, seems to be in a consolidation phase. Trouble is you never know when the consolidation period will start and when it will end. “Quite often a share price runs ahead of the company’s performance and then stagnates as the company catches up. I recently wrote about share prices ‘consolidating’ on my blog.

Halma market share water leak detection products