Are there any FTSE 100 stocks that could help me to get rich over time? I think that there are.
Right now, one stands out to me in particular. In my view, Halma (LSE:HLMA) is a terrific stock that I’m looking to buy this month.
Halma
Halma is a collection of businesses that operate in three areas. The first is industrial safety, the second is environmental monitoring, and the third is healthcare.
The company’s plan for making money is straightforward. It attempts to acquire businesses and use the cash that they generate to buy other businesses.
Part of Halma’s strategy is to encourage collaboration between its various businesses within its various segments. A good example of this is Ramtech.
Ramtech is one of the recent additions to Halma’s safety portfolio. It provides wireless fire detection systems for construction sites.
This adds to Halma’s existing portfolio of fire detection businesses, which also includes Argus and Apollo. The idea is that the three businesses can collaborate and learn together.
Growth
In making acquisitions, Halma targets companies that have significant prospects for organic growth. In the case of Ramtech, that involves two things.
The first is international expansion. Halma has a geographical presence that allows Ramtech to expand its distribution.
The second is technological expertise. Halma provides a specialist team that Ramtech can call upon to help evolve its technology portfolio, boosting digital growth.
Ramtech is just one of the businesses that is part of Halma. In total, the company is made up of around 43 smaller businesses.
As a result, the overall company has grown at an impressive rate. Over the last five years, earnings per share have increased by an average of 13.5% annually.
Risk
A good amount of Halma’s growth comes from buying other businesses. This means that there’s an inherent risk of overpaying for acquisitions.
I think that this is the biggest risk with Halma from an investment perspective. But I also think that there are some things that offset this risk.
One of the most important factors, in my view, is the size of the business. With a market cap of £8bn, the company has a wide set of opportunities available.
Berkshire Hathaway has a market cap of $641bn. As a result, Warren Buffett points out that it’s difficult to find investments that can make a significant difference to the company.
Halma doesn’t have this problem. Its smaller size means that it can take advantage of opportunities that aren’t significant enough to be attractive to larger companies.
This reduces the risk of overpaying because it means that Halma has a number of choices. If the right price can’t be agreed for a business, there will likely be others.
A stock to buy in November
Halma is my top FTSE 100 stock to buy in November. I already own the stock and I’ll be looking to add to my investment later this month.
I see the company as one of the best businesses in the FTSE 100. And with the stock down around 31% over the last year, I think that this could be a great time to invest.
