Judges Scientific (LSE: JDG) is the sort of success story investors dream about. The share price is up 1,900% in the last 10 years and in my opinion, it’s all down to the wonderful strategy executed by CEO David Cicurel and Chairman Alex Hambro. Note that I?ve not included dividends in that return figure, of which there have been plenty.
The two founders have followed a simple yet powerful strategy. The company acquires niche leaders in scientific testing and measuring equipment at reasonable prices, before growing them under the decentralised Judges Scientific umbrella. Usually, it pays down any debt on…
Judges Scientific (LSE: JDG) is the sort of success story investors dream about. The share price is up 1,900% in the last 10 years and in my opinion, it’s all down to the wonderful strategy executed by CEO David Cicurel and Chairman Alex Hambro. Note that I’ve not included dividends in that return figure, of which there have been plenty.
The two founders have followed a simple yet powerful strategy. The company acquires niche leaders in scientific testing and measuring equipment at reasonable prices, before growing them under the decentralised Judges Scientific umbrella. Usually, it pays down any debt on the balance sheet to allow unencumbered growth, while also supplying the capital necessary for its businesses to maintain their market-leading positions.
Cicurel has an uncanny knack of acquiring these businesses at dirt-cheap prices too and by my estimation is still finding great deals even in today’s bull market.
The shares haven’t exactly had the best time of it in recent years, however. The demand for scientific testing equipment isn’t constant, resulting in some choppy results.
On top of that, the shares are down 10% today at the time of writing after the company announced that Cicurel has sold 157,727 shares. That’s 2.58% of all outstanding shares.
However, the fall seems overdone to me and I view this as a buying opportunity. After all, even after that sale, the CEO still owns 12.4% of the company. Investors are worrying that the top executive is selling ahead of bad news but I feel we owe him a little more faith, given his wonderful track record.
40+ years of dividend hikes
What sort of a business can increase its dividend for more than 40 consecutive years? I’d expect many investors to suggest a utility, a pharmaceutical company or perhaps some other non-cyclical stock. I don’t think many would guess that James Halstead (LSE: JHD), a manufacturer of specialist flooring, would have managed it, but it’s true.
It’s an impressive result for a company that essentially sells a commodity. When I spoke to the management team a year or so ago, it seemed clear that a tireless focus on cost control and quality of product had propelled the business for decades.
Perhaps this culture was borne out of its family-run roots (the clue’s in the name). The company has, after all, boasted a net cash position every year since 1997. Last year, revenue grew 6.5%, with earnings per share rising 3.5%. The final dividend was hiked a greater 8.8% but still remained generously covered by earnings.
Perhaps the most impressive aspect of the business is its profitability. It achieved a 19.6% operating margin last year.
I keep a close eye on Halstead, but trading at a P/E of 25 I get the feeling investors could wait for a better entry point. In my view, the 10% fall in Judges makes it the better buy, although the track record of both these companies is to be admired.
Take the plunge
Understandably, some investors would feel nervous buying shares in Judges Scientific after such huge director dealings, but in my experience, the best investments you ever make will feel slightly uncomfortable before you pull the trigger.
As a shareholder in Judges, I have a high conviction in its ability to generate sky-high investor returns. Having conviction in your investments is important, but perhaps I'm too attached.
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Zach Coffell owns shares in Judges Scientific. The Motley Fool UK has recommended Judges Scientific. 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.