About: InvoCare is Australia’s largest operator of funeral homes, cemeteries, and crematoriums in Australia. The company’s operations include the provision of funerals, burials and cremation’s through a number of subsidiary brands.

Why it’s in the portfolio: InvoCare has been consistent in establishing its presence through Australia and New Zealand and more recently has expanding operations into Singapore. Acquisitions in various sub-sectors also substantiate the company’s growth profile, although this may be have less of an impact as time goes on. An ageing population positions InvoCare with a strong organic growth profile over the medium to long term.

Fundamentals: IVC has a market cap of around $1.7b, a P/E ratio of roughly 26 and a P/B of around 9. IVC has a trailing EPS of 0.55 and 0.37 DPS, giving the company a 98.9% dividend payout ratio.

What could go wrong: Considerable changes to the life expectancy of the markets in which InvoCare operates within, as people living longer will somewhat deter growth. Acquisitions have proven a valuable element of the companies growth stream to date, although poor deals have the potential to be destructive to firm value. Government policy also has the potential to alter the path of growth, particularly given the number of state-owned cemeteries which could impact the competitive dynamics and costs for consumers.