3 Ultra-profitable boring companies 💤

The more boring, the better. Boring means less competition, less investor interest, which (potentially) means a better valuation! Here are 3 ultra-profitable, but boring businesses.

Don’t get us wrong. These companies are anything but easy to operate. When we say “boring,” we’re not talking about uninteresting or simple to operate, we mean they’re mainly “unsexy.” They’re not popular growth stocks, but that doesn’t make them bad investments. Actually, quite the opposite is true.

Numerous sources confirm that these “boring” companies can be very lucrative for investors. The businesses:

• Often operate in mature industries and are less vulnerable to disruption;

• Tend to fly under the radar, because of less media coverage, fewer analysts, which often can lead to undervaluation.

• Tend to offer more predictable growth. That makes valuation and return forecasts slightly more reliable, and risk lower.

• Usually have a strong competitive edge because the industries they’re in are either too dull, too tough to break into, or simply not worth the hassle for most players.

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Here are three companies sitting right at the top of that “boring but brilliant” list:

1. 🐄 Hilton Food Group ($LON.HFG)

You’ve probably interacted with this company without realizing it. HFG packs and processes meat, fish, ready meals, and plant-based products. Some key customers are:

1. Albert Heijn in the Netherlands

2. Aldi in Europe

3. Walmart in Canada

4. Tesco in the UK, ICA in Sweden

5. Sonae MC in Portugal, and

6. Woolworths in Australia

Just to name a few… not bad, right?

Reasons you should care about Hilton Food Group

1. Unattractive for competition. Hilton Food Group runs on extremely slim margins. Net profit sits at just 1%. Yes, really. That alone scares off most would-be competitors. Think about it: generate £100 in revenue to make £1 in profit? Most would say, “No, thanks.”

2. Low market cap. A smaller market value, like a company worth less than £800 million, can be a great investment because chances are higher it’s overlooked by the market. It is also easier for a small company to double in size than it is for a giant one to do the same.

3. High-switching costs. As a B2B operator, Hilton Food Group holds a strong competitive position. Given their ability to offer a best-in-class price-quality combination, there's little incentive for a retailer to switch suppliers. After all, who can genuinely compete with the tight 1% margins Hilton operates on? These favorable terms, combined with the long-term contracts they secure, provide Hilton with reliable and predictable income. This structure also translates into high switching costs for their retail partners, effectively locking them in.

4. Nondisruptive. Unless we all start farming our own food, this business model isn’t going anywhere. Food has to be packaged. Whether it's plastic or some eco-friendly material, the need doesn’t disappear.

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♻️ Mo-Bruk S.A. ($WSE:MBR)

This might be the most boring company we’ve ever covered. And no, that’s not a dig at our analysts, Mathijs and Bouke, it’s the nature of the industry. But what they do is far from boring or easy.

Mo-Bruk owns six waste-processing plants across Poland.

Mo-Bruk locations | Mo-Bruk CPM 2024

The company does three main things:

1. Incineration: Burn industrial and medical waste to generate energy.

2. Stabilization & Solidification: Recycle toxic waste like slag and ash into synthetic aggregates and cement products.

3. RDF (Refuse-Derived Fuel): Turn waste like old railway sleepers into fuel for energy production.

Summary business model | Mo-Bruk

Reasons you should care about Mo-Bruk S.A.

1. Garbage to cash. It might seem dirty (and it is). But let’s be honest, people produce waste, and someone has to deal with it. Mo-Bruk turns garbage into cash. The Net profit margin stands at an impressive 24% and 21.8% ROIC’s. They literally burn trash and print money. Not bad for a dirty job, right?

ROIC & Net profit margin | Fiscal.io

2. The barriers to entry are massive. Especially in incineration. Mo-Bruk holds 30% of Poland’s capacity. Permits and grants for new facilities are rare and typically go to trusted players, like Mo-Bruk. We’ll say it out loud: no one’s replacing them for the next 25 years.

3. They also have serious pricing power. In just five years, they doubled revenue in the incineration segment without increasing capacity. That means a 15% compound annual price hike. Overall revenue grew at a 22% CAGR over the past 10 years. Strong.

4. Low market cap. With a market cap of just PLN 1 billion (€250 million) and low liquidity, this company is still tiny. That can work to your advantage if you’re early enough and right.

5. Low competition. Honestly, who wants to invest millions (or billions) just to burn trash? Feels like a classic case of: start as a billionaire, end up a millionaire.

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🗺️ KONE ($HEL.KNEBV)

KONE is a Finnish manufacturer of elevators and escalators, managing over 1.6+ million units worldwide.

They make money in three main areas:

• New installations: 42% of revenue

• Maintenance contracts: 40% of revenue

• Modernization: 18% of revenue

Revenue breakdown per segment and geographically | KONE

It’s the latter two that make the real money. The elevator business is well known for low-margin sales (0–7%) and high-margin service contracts (20–30%). It’s the razor blade model.

Reasons you should care about KONE

1. Oligopoly. First off, this is an oligopoly. The big four: Otis, Schindler, ThyssenKrupp and KONE, own roughly 70% of the elevator market. This means extremely high barriers to entry for new entrants.

2. Family-run. Since January 2024, Philippe Delorme is the new CEO. He brings 27 years of experience from Schneider Electric. Even though he’s an outsider, KONE is still very much a family-run business. The Herlin family controls 63% of the votes.

3. Urbanization trends are on their side. More people means taller buildings. Taller buildings need more elevators. Simple as that. Nearly the entire Western world, along with China and Japan, will face significant aging populations. Currently, 9% of the global population is aged 65 and older, and this is expected to rise to 13% by 2035.

4. High switching-costs. Once you’re locked into a maintenance contract, switching is hard. You need matching parts, trained engineers and service guarantees. It’s a sticky business.

KONE is a €30 billion company with ROIC above 18% and ROCE above 36%. Strong, efficient, and clearly profitable. Worth a closer look.

Our deep dives into Hilton Food Group, Mo-Bruk, and KONE are just the tip of the iceberg. We break down what makes them work, and what doesn’t.

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