❸ ARB

ARB is the manufacturer and distributor of aftermarket 4X4 accessories including winches, vehicle lighting and bull bars. The company has more than tripled profits over the past decade. However, it has had the benefit of three times as much equity. It therefore has maintained a relatively high rate of return on equity of nearly 20%pa. ARB is currently trading above our estimate of its intrinsic value, which suggests the shares aren’t cheap. However, the company also enjoys strong cash flows, which combined with a high rate of profitability has, over time, led to consistently growing dividend income.