In August, Diploma (DPLM) moved from the FTSE 250 into the FTSE 100. Its ascent attracted little fanfare; investors were too busy celebrating Marks & Spencer’s (MKS) triumphant return to the blue-chip index. M&S isn’t the height of glamour, but it has famous faces such as Holly Willoughby and David Gandy to add a bit of sparkle. Diploma, on the other hand, only has sealant and endoscopy cameras to fall back on. Its lack of obvious charm is more than made up for by its proven business model and defensive growth prospects.
- Structural growth opportunities
- Cash generative
- High-margin relative to peers
- Proven resilience
- Some cyclical exposure
- Richly valued
Diploma is a specialist distributor made up of about 20 separately managed businesses. Its products fall into three categories – controls, seals and life sciences – and include products such as wiring and cables, gaskets to prevent the leakage of toxic materials, and medical instruments.