Offering investors good insulation against the effects of wider economic issues, hospital infection control specialist Tristel is growing strongly as the NHS gets to grips with its highly politicised ‘superbug’ problem.

Driven by national concern about the poor levels of infection control, Tristel’s application of chlorine dioxide chemistry is proving an effective, and hence popular, method of decontamination. The company has expanded its reach into hospitals, from sterilising instruments to decontaminating water, floors and walls – and now, says chief executive Paul Swinney, ‘there’s maybe only 20 hospitals in the UK that don’t use something of ours’.

Having moved the manufacturing process in-house, the group enjoyed margin expansion from 63.3% to 67.3%, in turn contributing to a 55% rise in pre-tax profits to £1.2m from turnover up 16% to £6m. Thanks to strong internal cash flow and a £1m fundraising in March, Swinney was able to complete the capital expenditure on the production facility, lift the dividend 15% to 1.55p and still boast a small net cash position at the year-end.

Now dominant in the decontamination of certain instruments, Tristel is pursuing growth from the development of new products. The existing product offering has further expansion potential but Swinney is particularly optimistic about the recently launched ‘Shine’ – a new automated method of disinfecting instruments in the ear, nose and throat departments – saying ‘it should make a big impact’.

In light of good momentum and powerful political drivers, Tristel’s forecasts from house broker Daniel Stewart of low double-digit growth at 4.6p of earnings can be confidently anticipated. The shares, backed by Growth Company Investor in 2005 at 60.5p, topped 80p two years ago but at present levels look markedly undervalued. Buy.

Save 50% off your first year’s subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.

Tristel	AIM	£10.62m	39.50p	0.00p
Click here for interactive charting
Other company articles:
Tristel			06/10/2008
Tristel			08/11/2007
Mattioli Woods delivers the goods			27/02/2007
Tristel			19/02/2007
Goals profits from beautiful game			06/11/2006