Do you know any great companies in slow growth industries?

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22nd Oct '16 by Jonny shares

7 comments 5921 reads

Anybody have any thoughts or stocks on great companies in poor no growth industries? Or thoughts on what currently is a no growth /slow growth industry or what could soon will be?

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About the Author

Jonny Shares

Premium Member

7 comments

Blissgull

23rd Oct '16

Strange question!

I'm not sure why you'd look for low growth industries, except perhaps for yield.

Tobacco is a low growth industry. Killing off your best customers is a bad business plan. But the tobacco companies are cash machines. BAT has been a star performer over the last decade.

High street retail is low or negative growth at the moment. The utility sector would probably fit the bill.

WarrantStar

23rd Oct '16

Hi Johhny
I suggest that you set up a screen on here for something like

Growth rank less than 33
Value rank more than 66
Quality rank more than 66

You will probably need to adjust the above numbers so as to come up with a list of a dozen or so companies to look at in further detail.
If what you are really looking for is dividends then you can add another requirement like yield greater than 3%.
Good luck

Jonny shares

23rd Oct '16

Evening Blissgull, thanks for the response.

My theory being is that a growing business( also a good one) in a poor or declining industry will soon pick up the market share of all of the poorer business struggling to compete, who will probably go out of business before long, their for leaving the good business with total domination.

Brilliant Leader

23rd Oct '16

The Boston Consulting Group referred to this type of company as an old war horse - a cash cow that continues to grow market share in a declining market as the market becomes less saturated. I would be interested to know what companies you come up with that might fit this category. Whether it will throw up any great investments other than a decent yielder is doubtful in my view but I am open to being proved wrong.

EDIT - I should have added that the BCG were referring to various products in a company's mix rather than entire companies but hopefully you get my drift, it's a similar principle.

thebuffoon

23rd Oct '16

What sort of person would give a thumbs down to post 3?

Nice thinking Jonnyswooli. I'm sorry I can't contribute.

Buffy

jjis

24th Oct '16

You might want to take a look at McColl's Retail (LON:MCLS) which is acting as a consolidator in the convenience and newsagent stores segment. In a similar area would be Connect (LON:CNCT) formerly Smiths News Plc, is a United Kingdom-based distribution company which operates in the declining newspaper & magazine distribution market and other specialist areas. Good luck with your investing.

ExpectingValue

24th Oct '16

As mentioned above, Connect Group / John Menzies are a great example of this in the newspaper distribution industry. The stocks have their own quirks so the theory might not play out as you envisage it, but these are good examples.

I wrote something about Connect a couple of years ago which sort of examines the angle you are discussing here:

http://expectingvalue.com/shares/connect-group-putting-up-a-fight

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Do you know any great companies in slow growth industries?

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About the Author

Jonny Shares

7 comments

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