Warren Buffett has a name for companies that are virtually certain to grow consistently for decades into the future. He calls them The Inevitables. Now, Mitie may or may not be an ‘inevitable’, but it sure does a fantastic impression of one. MITIE have produced record revenues, earnings and dividends for over 10 years straight. That in itself is fantastic, but this isn’t some utility company growing at a couple of percent a year. Their growth rate has been something like 10% a year and more. As a buyer of above average companies, this is exactly what I like to see.
Much like Tullett Prebon, a large part of that growth has come from the sector they operate in. As an outsourcing company they help clients to offload non-core property and facility management tasks. This means they do a bit of almost everything including reception desk, security, cleaning, engineering, maintenance, waste and energy management and much more; basically they cover almost everything to do with looking after buildings and more besides.
The outsourcing market has been a pretty hot place to be over the years as it’s grown from a niche market providing single services like cleaning or repairs into a far larger, more mainstream and mature market where outsourcing companies now look to provide bundled services and more recently, full business process outsourcing.
MITIE have ridden this wave expertly, building a great company and a great reputation in the process.
A good example of the sort of interesting projects they do now was the design, build and operation of a distributed green energy centre for the first Waitrose on the Isle of Wight. This energy centre will help the superstore to its goal of being carbon negative.
So MITIE have a very broad scope, from cleaning services to green power centre construction and operation.
One thing I hate to do is prognosticate about the future. I'll leave that to others who can endlessly seek to gain an edge over each other by trying to work out what next year will look like for a given company or economy. Instead I try to pick companies that can do well no matter what. That’s exactly why I look for companies like MITIE and AstraZeneca which have long histories of success, hopefully in sectors that aren’t likely to die out in the next…
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