Tiring of the Magnificent Seven? Here’s our Great British Fab Four

Looking for a break from US mega-cap tech stocks? In this wire, I profile four outstanding UK mid-cap stocks owned in the Aoris portfolio.
Stephen Arnold

Aoris Investment Management

Great Britain has given the pessimists plenty of fodder in recent years – first Brexit, then a revolving door at No. 10 Downing Street, and now an economy limping along at best. But as Hugh Grant’s character, the Prime Minister, says in Love Actually:

We may be a small country, but we’re a great one too. A country of Shakespeare, Churchill, The Beatles, Sean Connery, Harry Potter, David Beckham’s right foot, David Beckham’s left foot, come to that.

Great Britain is also home to some truly world-class businesses. Currently, 4 of the 15 companies held in the Aoris portfolio are British. Let me share some of the special characteristics we see in Compass Group, Halma, Experian and RELX .

Compass Group – feeds the world

Compass Group is the world’s largest contract catering firm. It serves over 16 million meals each day to schools and universities, corporate offices, hospitals and retirement villages, remote mining sites and sporting and entertainment venues. Clients include Google, which is Compass’ largest customer, and Harvard University.

About 55% of global catering sites are outsourced today, up from 50% in 2019. Compass is by far the largest operator globally, and has consistently gained share in this attractive, growing market. Scale confers many benefits, such as in food purchasing and labour efficiencies.

Compass retains its customers for an average of over 25 years.

Compass is highly profitable and growing at an attractive rate. We expects its earnings in the coming years to increase by around 10% p.a.

Halma is a group of specialty life-saving technology companies

Halma has leading positions in growing niche markets in three broad spheres – Safety, Environmental and Medical.

You’ll find products made by Halma companies in critical everyday applications that we all rarely think about.

In Safety, examples include fire detection and suppression systems, emergency communication systems, and explosion protection devices used in industrial processes.

Halma’s Environmental applications include technologies that detect hazardous gases, analyse air and water quality, and optical analysis systems used in food safety.

In Medical, Halma supplies advanced technologies, digital solutions and components used in areas such as in-vitro diagnosis, cataract surgery and cardiac monitoring.

Halma has increased its dividend by 5% or more for 43 consecutive years.

We expect Halma to deliver many more years of high-quality growth in earnings and dividends.

Experian is a world-leader in credit data and analytics

Experian’s analytical and decisioning tools are deeply embedded into the workflows of banks, health care providers, auto dealers, telecoms and government agencies. Experian helps these organisations target their customers, make better and faster credit decisions, manage their credit risk and mitigate fraud.

Experian also helps consumers understand their credit profile, quality for better credit offers, and protect themselves against identity theft and fraud.

Experian has detailed credit-relevant information on over 1.5 billion consumers and 200 million businesses.

Experian is highly profitable and growing earnings at an attractive rate, which we believe can continue for many years to come.

RELX is at the heart of academic, legal and risk assessment markets

RELX provides data, analytics and decisioning tools to professional users in these three markets. While the company’s origins are in humble print publishing, RELX’s digital solutions are today deeply embedded in the workflow of its customers.

In academia, two examples of RELX’s solutions are Scopus, the largest abstract and citation database of peer-reviewed academic and medical journals, covering nearly 37,000 titles from 12,000 publishers, and SciVal, which provides insights into the performance of over 22,000 academic institutions.

In risk assessment, RELX has market-leading fraud and identity solutions and software for financial compliance, used to help banks comply with Know Your Customer, Anti-Money Laundering, and terrorist financing regulations.

RELX’s is the global leader in device identity, used by banks and ecommerce retailers to validate that a transaction is from a legitimate device.

RELX offers many solutions to legal practitioners, including Litigation Analytics which helps litigators develop their strategy, choose the right expert witness or analyse the strength of their legal arguments, and MLex which is a regulatory risk monitoring tool.

In summary

So, if you’re looking for a change from US mega cap tech stocks, consider our Fab Four. Each of these Great British companies are established world-leaders in attractive, growing markets. They are highly profitable, consistently gaining market share, and operate in specialty markets with unusually high barriers to competitive entry. You can learn more about these 4 companies and the other 11 in the Aoris portfolio by visiting our website. 

This report has been prepared by Aoris Investment Management Pty Ltd ABN 11 621 586 552, AFSL No 507281 (Aoris), the investment manager of Aoris International Fund (Fund). The issuer of units in Aoris International Fund is the Fund’s responsible entity The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL License No 235150). The Product Disclosure Statement (PDS) contains all of the details of the offer. Copies of the PDS are available at aoris.com.au or can be obtained by contacting Aoris directly. Before making any decision to make or hold any investment in the Fund you should consider the PDS in full. The information provided does not take into account your investment objectives, financial situation or particular needs. You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. You should not base an investment decision simply on past performance. Past performance is not an indicator of future performance. Returns are not guaranteed and so the value of an investment may rise or fall.

Stephen Arnold
Managing Director & Chief Investment Officer
Aoris Investment Management

Stephen founded Aoris Investment Management in 2017 and has been investing internationally for around 25 years. Prior to Aoris, Stephen was Head of International Equities at Evans & Partners where he directly managed $1bn of client assets.

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