Tuesday tips round-up: Bunzl, Dechra Pharmaceuticals
Despite foreign exchange headwinds and the economic slowdown on the continent, Bunzl continues to sport a multiple of over 21 times earnings. The company, which distributes a range of workaday cleaning goods to firms around the world, is now the 63rd largest on the stock market. Despite having already provided shareholders a yearly return of approximately 10% over the past decade, it thinks it can continue to grow above the underlying rate of GDP each year.
Bunzl
3,054.00p
16:34 23/04/24
Dechra Pharmaceuticals
3,866.00p
08:01 16/01/24
FTSE 100
8,044.81
16:49 23/04/24
FTSE 250
19,799.72
16:59 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:14 23/04/24
Pharmaceuticals & Biotechnology
21,866.08
16:59 23/04/24
Support Services
10,639.30
16:59 23/04/24
The trick, of course, lies in part in its ability to pull-off bolt-on acquisitions. Nonetheless, in the fourth quarter it actually achieved an increase in its rate of organic growth. Indeed, although competitors may be lured into its sector its lead seems unassailable. So even on such a multiple the stock is still a buy, writes The Times’s Tempus.
The veterinary market can only grow so much, but it is lucrative. So companies such as Dechra Pharmaceuticals, which offers products for things such as equine lameness stand to gain. Furthermore, the big firms do not yet dominate the space. The dynamics in the sector are much the same as those for the market for humans. The keys lie in obtaining regulatory clearance for your products and favourable word of mouth.
However, Dechra’s antibiotics have been facing an uphill climb in Europe, given increased levels of resistance. As well, its plans for expansion in the US may prove tricky to execute. Lastly, selling on 24 times earnings progress in the stock may be slow. So, “avoid for now,” Tempus says.