Strix (LON:KETL) might just be the best UK-based, world-leading niche designer and manufacturer you’ve never heard of.

This mid cap Industrials company is one of the key players in its core global market of kettle safety controls (which prevent kettles from overheating) and is busily expanding into all things related to water heating, temperature control, steam management and water filtration.

Strix continues to develop products and processes in additional large domestic appliance markets - two important examples being the launches of Aqua Optima water filters in 2003 and Tommee Tippee Perfect Prep in 2013.

The company is an important part of the domestic appliance value chain and is regularly consulted on matters by original equipment manufacturers (OEMs) and brand owners alike regarding areas where it is considered an expert.

Although operating and net profit growth have not been too exciting in recent years, the group has been busy investing in its products and operations. R&D spend has been going up and Strix sees a number of growth opportunities.

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The group has committed to launching twelve new products across the appliance and water categories during 2020, as part of its “strategy for enhancing its core technologies to develop innovative and sustainable products”, and it is also looking for “strategically compelling acquisition opportunities” in this area.

Strix catches my eye for several reasons. It is a high quality operator and an established expert in the domestic appliance value chain, it has a dominant and entrenched market position backed up by patents and long term customer relationships, and it has a cash generative business model. Net debt is going down and dividends are going up. According to Stockopedia, Strix is a high QM, high VM Super Stock.

So, with its shares trading at just 12.2 times forecast earnings, is this our chance to get involved in a high quality, dividend paying UK manufacturer with an economic moat?

History and operations

Strix traces its roots as far back as 1951, when a man named Eric Taylor founded Castletown Thermostats. Taylor invented a revolutionary thermostat used during the 2nd World War to control heated flying suits worn by bomber crews at high altitude. This high-tech combat innovation then became, rather brilliantly, the foundation of the modern kettle control.

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In 1981, Eric’s…

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