MIDAS SHARE TIPS: Here’s a hot tip – Goodwin, the group that can put out battery fires

Amid much fanfare, COP28 has begun, where the great and the good will spend days debating how best to curb climate change. Electric vehicles are likely to feature prominently on the agenda, as transport contributes around one fifth of global emissions.

Most of these vehicles are powered by lithium-ion batteries, demand for which has surged in recent times. Experts predict the market will increase by 30 per cent annually over the next six years, reaching a value of more than £300 billion by 2030.

Lithium-ion batteries are everywhere, not just in cars and trucks but also in mobile phones and laptops, electric toothbrushes and burglar alarms, electric bikes and scooters. There is just one small problem – the batteries are highly flammable and, if they catch fire, conventional extinguishers do not work.

Stoke-on-Trent-based Goodwin has a solution that puts out lithium-ion fires safely and effectively. The product has already been taken up by leading fire safety group Firechief and sales should soar both here and overseas.

But Goodwin is no fly-by-night technology firm. The company was founded by Ralph Goodwin in 1883, floated in 1956 and still has four Goodwins on the board, including chairman Timothy.

Breakthrough: Conventional extinguishers do not work on lithium-ion batteries, but the historic Goodwin group has found a profitable solution

Goodwin shares are £50.40, which may sound expensive on a unit cost basis. But this stock should deliver substantial rewards, as the business has proven its merits over the past 140 years and plans to continue in the same vein.

Goodwin started out as an iron foundry and engineering business, with a focus on highly-skilled processes and constant innovation. That philosophy holds true to this day, even as new generations of Goodwins have expanded into different industries and increased exports across the world.

Defence is a case in point. As China and India began to dominate global steel production, the Goodwin clan recognised they needed to move into niche areas where cheaper Asian firms could not compete. Defence and nuclear decommissioning stood out so Goodwin invested time and money developing highly advanced steel castings for these industries, confident that this decision would be repaid over time.

Today, Goodwin’s foundry is one of only five in the world accredited by the US navy to produce castings for submarines and frigates. The accreditation process took seven years but it worked.

Goodwin supplies castings for UK Naval vessels too, and plays a central role in the Aukus programme, where America and the UK are helping Australia to develop a state-of-the-art submarine fleet.

On the nuclear front, Goodwin works with plants including Sellafield and Sizewell B. The group also makes high-grade pumps for mining firms around the world and produces specialised components for suspension bridges, such as the Oakland Bay Bridge in California. A separate division makes castings for jewellery, with customers including the hugely popular brand Pandora, whose products are sold in 70 countries.

Despite all this activity, Goodwin is committed to developing new products, such as a specialised polymer resin used to make semiconductors. The market has been dominated for years by multinational chemical giants but Goodwin believes it can undercut these firms and intends to start selling its material next year.

Goodwin’s product mix is large but the unifying thread is a focus on making exceptionally high-quality goods to attract new customers and ensure existing customers will stick with it. The family also believes in the power of profit, generating cash to reinvest in the business and pay dividends to shareholders.

Results for the year to last April were testimony to the success of this strategy, with revenues up nearly 30 per cent to £186 million, profits up 10 per cent to £18.9 million and dividends up 7 per cent to £1.15 a share.

Further strong growth is forecast not just for the current year but for several years to come.

Midas verdict: The UK steel industry has been under pressure for decades, hit by rising costs, falling demand and intense competition. Goodwin runs one of the oldest foundries in the country but this robust family business shows what can be done with ingenuity, clear sight and true grit. At £50.40, these shares are a long-term buy.

Traded on: Main market Ticker: GDWN Contact: goodwin.co.uk or 01782 220000

This post first appeared on Dailymail.co.uk