1 FTSE 100 stock I’d buy and hold for a long time

This FTSE 100 stock is up today after a positive trading update. Based on it, this Fool believes that its share price will keep rising further. 

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Today is a relatively good day for the stock markets. The FTSE 100 index is back up above 7,000 after the tremors felt earlier this year, originating from Asia. Expectedly, stocks exposed to China, that fell most, are also among the biggest gainers today as stability returns. So far they have gained anywhere between 3% and 4%. In this environment, it is easy to miss out on other FTSE 100 news makers that are also gaining. Like the safety equipment provider Halma (LSE: HLMA), which is up 1.5% today.

Halma posts positive trading update

This rise follows the company’s positive trading update. For the period starting 1 April up to now, the company reports that its performance is ahead of expectations. It says that revenue growth has actually exceeded historic levels. A reduction in variable costs that were due to the pandemic has also positively impacted its bottom line. 

It has also reported positive developments across segments. In both the safety and environment segments, it reports “the strongest organic revenue and profit growth in the year to date” as demand returned since the moderation of the pandemic. In its safety segment, Halma provides products related to elevator safety and fire detection, among others. Under environment, it helps in gas detection and water treatment and analysis. Its medical segment, which provides products that support eye and heart health, among others, has also benefited because of a return of elective medical procedures. 

Strong performance for the FTSE 100 stock

It has also said that its orders are strong, which should continue to reflect in the company’s performance over time. This in turn, can translate into further increases in its share price. Over the past year, Halma’s share price has increased around 40%. This is really good going for a firm that has already performed well even when the stock markets were sluggish during the worst of the pandemic last year. It has performed well over a longer time period too. Over the past three years, it has almost doubled its share price. 

Pricey, though

With this as the background, it is little surprise that Halma is a pricey stock with a price-to-earnings (P/E) ratio of around 57 times. At a time when other promising stocks are seeing a decline in share prices, especially after the recent weakness in stock markets, it can look less attractive for this reason.

But I think this particular stock is in a different league. Much like the pharmaceutical biggie AstraZeneca, whose P/E has stayed significantly higher than the average FTSE 100 ratio for at least the entire time that I have covered it, it too stays high for a reason. And that I reckon is because it is a financially healthy defensive that also has a promising future. When I wrote about it last year, its P/E was 46 times and it has only risen since. 

What I’d do

Ideally, I would like to wait for a dip in its share price before buying it, but I am not sure if a meaningful dip will come anytime soon. Going by its past performance, share price trends and outlook, now is a good time as any for me to buy and hold the stock for a long time.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Manika Premsingh owns shares of AstraZeneca. The Motley Fool UK has recommended Halma. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Cheerful young businesspeople with laptop working in office
Investing Articles

5 dividend stocks with 5%+ yields I’d buy now

These dividend stocks should deliver reliable yields of between 5% and 8%, which means they appeal to Roland Head.

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

2 ‘irresistible’ FTSE stocks to buy before the market recovers!

For me, the FTSE is the most attractive index to invest in. Valuations are low and yields are high. So…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Is NIO stock a buy at $20?

NIO stock has been pretty volatile over the past few months. Here, Dylan Hood takes a look to see if…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

I’m buying more Lloyds shares at 45p! Here’s why

Lloyds shares look cheap to our writer at present. Charlie Carman outlines the factors behind his decision to invest more…

Read more »

Jumbo jet preparing to take off on a runway at sunset
Investing Articles

When will the Rolls-Royce share price recover?

The Rolls-Royce share price may be down, but cash flows are surging! Zaven Boyrazian explores how long it could be…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

1 dirt-cheap FTSE 100 stock I think could TRIPLE my money!

Demand for lithium is forecast to surge by 42 times, enabling this FTSE 100 stock to potentially supercharge its profits…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I invest in the FTSE 100 – or try to beat it?

Our writer has the option of investing in a FTSE 100 tracker fund. So why does he choose to buy…

Read more »

Young black woman walking in Central London for shopping
Investing Articles

£1,500 to invest in a Stocks and Shares ISA? Here’s how I’d do it

Our writer has been investing in his Stocks and Shares ISA. Here he details how he could put £1,500 in…

Read more »