AIM listed Funeral homes group Dignity (FTY) is one of those companies whose shares always look expensive, but then always seem to head higher. You always kick yourself for not buying the stock, after all we have an ageing population and so death ( like taxes) looks a sort of one way bet. As it happens, that is not the case. At a share price of £11.02 the company is now capitalised at £603 million. Is this justifiable?
The group has expanded largely by opening more and more funeral parlours across the country. I had assumed, as I suspect had you, that an ageing population meant that it would have more, er .. customers. But it is pointed out to me that we actually face a bit of a demographic blip. The effects of WW2 and improved health care mean that for the next decade or so the number of “customers” will not actually increase but will fall marginally. It will start picking up again in c2022.
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