The Week In Review: Buy these shares and clean up
JOHNSON MATTHEY is cleaning up. In both Europe and the US, new legislation is forcing the manufacturers of heavy-duty diesel vehicles to cut engine emissions. It is the industrial equivalent of the introduction of catalytic converters as standard to cars in the 1990s, and Johnson Matthey - which makes the chemicals used as catalysts - is expected to enjoy some impressive sales growth over the rest of this decade as a result.
Indeed, the company operates in several exciting medium- and long- term growth areas. It has a strong business, making ingredients for drugs, when an ageing population guarantees there will be growing long-term demand.
And buyers of Johnson Matthey shares are also taking an option on the emergence of fuel cell technology in which hydrogen can be used as an alternative to traditional energy sources. The group makes parts for experimental fuel cells in a division that could break into profit soon and be a dramatic plus to the group in the long term.
Johnson Matthey’s balance of prospective growth and modest 3 per cent dividend yield makes the shares look compelling. Buy and tuck away.