We primarily like this company due to the fact its products are specialist and benefit the environment in areas such as emission controls, and providing protection for larger systems. In turn, many of the products subsequently need to be replaced or serviced regularly indeed; a significant amount of revenue comes from this. The business aims to focus on markets that show long-term growth potential and where the product use is mandatory.

There are two main divisions through which the company operates: Microfiltration, which serves aviation, environmental laboratory and industrial markets and Metals Filtration, which serves North American iron foundry and super-alloy markets. Investors should appreciate that 44% of revenue is manufactured in North America, where demand for aviation and metals filtration at a foundry and machine shop is strong.

In a trading update released last week, Porvair stated that profit for the first nine months of the year was ahead of expectations, on the back of 8% revenue growth. Moreover, the CEO reiterated that there is a healthy order book, a promising project pipeline and opportunities for further future growth. Interested investors may also want to note that it also plans to design new products and improve its global presence while maintaining a conservative balance sheet and paying a progressive dividend.

After hitting an all-time high in June the share price – which may have run too high – has drifted lower. On a forward PE of 24.9 the shares do not appear overly cheap, but this is a smaller company that is establishing a niche for itself in regulated markets that continues to grow and has a good track record in earnings growth. We therefore recommend Porvair as a ‘buy’ for higher risk investors seeking long-term growth.