MIDAS SHARE TIPS UPDATE: Filter firm Porvair clears the way for bigger payout
When Ben Stocks became chief executive of Porvair in 1998, the company generated almost all of its revenue from waterproof plastic. Over the next few years, everything changed.
A strategist by nature, Stocks reckoned Porvair needed to pivot out of plastics and into an area where it could become a genuine specialist, making goods that other firms had overlooked, but that were essential for daily life.
Out went plastic and in came filters. The company already had a small filtration division, but today it is a leading producer of filters used in a range of industries around the world, from aerospace to healthcare to water processing.
In demand: Today Porvair is a leading producer of filters used in a range of industries around the world
About 40million filters are made every month for PCR tests worldwide, ensuring laboratories can eliminate external elements. Porvair also works with laboratories that analyse water to make sure it is clean and pharmaceutical products to ensure they are safe.
The company specialises in molten metal filtration too, producing about 500,000 filters a year to ensure aluminium is pure before it is moulded into components for iPhones, electric vehicles or industrial machinery.
Even fizzy drink cans rely on Porvair kit, without which they might leak or explode.
Filters range in size from minuscule objects for scientific research to giant structures, three storeys high and 25ft wide, used to convert biomass to energy.
Filters are a critical part of hundreds of industrial and commercial processes and they are a fractional cost of a firm's overall expenditure.
As a result, customers tend to stick with Porvair because it provides an essential piece of kit. And they are less likely to make a fuss if prices rise slightly because filters are comparatively cheap compared with other bits of equipment.
Porvair operates in the UK, the Continent and China, but its largest market is America, which accounts for half of group sales and seven of the firm's 15 manufacturing plants.
US business has been brisk of late, as firms have begun to bring manufacturing home, swapping Asian suppliers for local players.
And Porvair is considered local. The group is headquartered in King's Lynn, but Stocks has adopted a decentralised model, so while he and the finance director are based in the Norfolk head office, almost all of the remaining 1,000 or so employees work on location.
Stocks' focus on filters has delivered consistent, long-term results, generating average annual sales growth of 8 per cent to 9 per cent and profit growth of about 10 per cent annually over the past 15 years. This year should follow the same reassuring pattern.
Porvair delivered record interim results for the six months to the end of May and brokers forecast a near 10 per cent increase in sales to £160million with profits up just over 10 per cent to £16.3million for the year to the end of November.
Stocks is a committed dividend payer too so the annual payout is expected to rise from 5.3p to 5.6p, with further increases pencilled in for 2023 and 2024.
Midas verdict: Porvair cannot shield itself entirely from economic headwinds but the group has a strong order book, plenty of cash and Stocks has already weathered several ferocious recessions.
Midas recommended the shares in 2018 at £4.55. They are now £6.00 but were almost £8 before the pandemic.
They deserve to move back towards that level so existing shareholders should hold on to their stock while new investors could also grab a slice of this pie.
Traded on: Main market Ticker: PRV Contact: porvair.com or 01553 765500
Most watched Money videos
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Volvo's Polestar releases new innovative 4 digital rearview mirror
- Land Rover unveil newest all-electric Range Rover SUV
- Blue Whale fund manager on the best of the Magnificent 7
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mercedes has finally unveiled its new electric G-Class
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Mini Cooper SE: The British icon gets an all-electric makeover
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- How to invest for income and growth: SAINTS' James Dow
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Mini celebrates the release of brand new all-electric car Mini Aceman
- BBVA goes directly to shareholders as it steps up bid for...
- MARKET REPORT: North Sea giant Harbour closes in on £9bn...
- Cameron left red-faced as Greensill sues Government over...
- Takeover target Wood Group hit by slump in revenues as...
- My uncle has £14,000 in Dart Charge fines despite trying...
- How criminals could use AI to scam Britons - and what can...
- Some estate agents only put forward offers from buyers...
- Bank of England paves way for Britain to cut interest...
- Will my newly self-employed husband cause us a remortgage...
- Families with TWO retired generations will surge to one...
- Bailey pulls his punches on interest rates yet...
- BA owner IAG profits climb more than sevenfold
- ITV hopes for summer ad boom as it continues to reel from...
- Vodafone told to boost security as £15bn Three merger is...
- BUSINESS LIVE: UK GDP grows 0.6%; IAG profits take off;...
- SMALL CAP MOVERS: Light Science Technologies sales flourish
- Rightmove expects weaker ad revenue growth as more...
- The truth about where those Omaze millions really go:...