‘Running winners’ is a successful strategy for generating wealth. The difficult part of course is buying those high potential stocks at the right price, and then being prepared to stick with them over the long term. One good hunting ground is in Healthcare - especially for those companies that are globally scalable, deliver double digit top line growth and enjoy strong patent protection. Tristel possesses all three, along with high recurring revenues and predictable cashflows.
Consequently over the next 3-5 years, we believe the shares could return shareholders >10x their money from the 21p lows back in April 2013. Granted the price has already risen nearly 7-fold to 145p, but given the size of the addressable market and pent-up demand for its proprietary infection, hygiene and contamination control products, we think there is plenty more to come.
Indeed, only a fortnight ago there was another press article warning of the risks of superbugs (click here http://www.dailymail.co.uk/health/article-3346440/Superbugresistant-antibiotics-reaches-Europe-Danish-patient-infected-untreatable-formsalmonella-probably-Britain.html). The latest deadly strain doing the rounds being ‘MCR– 1’, which if not controlled properly could cause a “global epidemic of untreatable infections”.
This is where Tristel’s chlorine dioxide (Clo2) chemistry fits in. Clo2 is one of the quickest, safest and most effective ways of killing such microbes and other harmful bacteria like Clostridium difficile. In fact its superior efficacy verses other leading hospital disinfectants was once again demonstrated in a recent clinical trial in France.
Importantly too, we think new investors haven’t missed the boat, since the firm has only just begun to scratch at the surface in terms of market penetration. You see although the UK is presently its largest revenue generator (representing 64% of FY15 sales and growing at 10% pa) - future opportunities abroad could drive organic top line growth at 15% pa (or even higher) for many years ahead (see above chart).