Stocks with high quality set to gain from prolonged worldwide expansion
In the vast world of business, three companies – Airbus, Dexcom, and Ashtead – are making significant strides, each carving out their niche in distinct industries.
Airbus, based in Paris, France, operates in a duopoly with Boeing, the US firm, in the airframe manufacturing sector. The competition between these two giants is evident in the market for short-haul, single-aisle planes, where Airbus' A320 competes directly with Boeing's 737. Interestingly, despite predictions of a recession in 2023, the stock market today remained robust, providing a stable backdrop for the aviation industry.
Air travel continues to grow, with an estimated 80% of the global population yet to set foot on a plane. This expansion is driven by the new generation of planes from Airbus and Boeing, which offer 20% greater fuel efficiency compared to older models. As a result, airlines are increasingly opting for these fuel-efficient planes to reduce their carbon emissions.
Meanwhile, in the healthcare sector, Dexcom is revolutionising the management of diabetes. The company, listed on the Nasdaq as DXCM, is a leader in the field of continuous glucose monitoring (CGM). Dexcom's devices, which are attached to the skin and track glucose levels via an app on your phone, are helping to reduce complications, increase longevity, and improve the quality of life for those with diabetes.
The current market volume for Dexcom is part of a global blood glucose monitoring market valued at approximately $17.2 billion in 2024. Dexcom holds a notable position alongside industry heavyweights such as F. Hoffmann-La Roche and Abbott. The company's revenue was around $4.03 billion in 2024 and is expected to grow to about $4.72 billion in 2025 and $5.46 billion in 2026, reflecting steady growth over recent years.
On the other hand, Ashtead, listed on the London Stock Exchange as AHT, is a leading player in the industrial and construction-equipment rental sector. The company, which operates in the US, Canada, and the UK, offers a unique business model. By purchasing equipment in bulk at attractive prices and renting it out on good margins, Ashtead provides a cost-effective solution for businesses. This model reduces costs for individual firms, as equipment is infrequently used and storage and maintenance are expensive.
Ashtead's extensive inventory includes a wide variety of equipment such as cranes, diggers, floor cleaners, and even film-studio equipment. This diverse range allows the company to cater to a broad spectrum of businesses for industrial and commercial purposes. With around 13% market share, Ashtead has room for growth in this sector.
Investment strategies are often focused on top-down factors like GDP growth, interest rates, or foreign exchange rates. However, the fortunes of individual companies like Airbus, Dexcom, and Ashtead, as we've seen, can provide a more nuanced picture of the stock market today. Therefore, it's crucial to analyse the performance of these companies to make informed investment decisions.
In conclusion, Airbus, Dexcom, and Ashtead are thriving in their respective markets, each leveraging unique strengths and business models to carve out their niches. As these companies continue to innovate and grow, they are set to shape their industries for years to come.
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