Shares in Dignity, the UK's only listed funeral director and crematoria operator, have had a good run recently and are not far off the record high of 800.56p seen in October
However, the shares have been sliding for the past week or so – and now looks a good time to bank profits, particularly as the dividend is relatively uninspiring.
The company has a successful business model. It has a strategy of consolidating in the fragmented market of family-owned funeral directors.
In its recent trading update, Dignity said revenue rose 9.6pc to £59.1m in the 13 weeks to April 1. Underlying operating profit rose to £22.6m from £20.4m in the equivalent period of last year.
In the first quarter, the group has bought three existing funeral locations and has opened eight new satellite locations.
The company's crematorium in Somerset became operational in late March and another in Worcestershire is expected to be brought into use by the end of the third quarter.
Pre-arranged funeral plan sales continue to be strong, Dignity said.
However, some analysts have questioned the future impact of these services.
"We continue to be concerned about pre-arranged funerals and whether these are truly assets in the form of future potential funerals to be performed, or liabilities in the sense that funding may not match the sums needed to perform these funerals at suitable profitability," said Franc Gregor, an analyst at Charles Stanley, following the group's last trading update.
The shares were first recommended at 538p on May 5, 2009, and they are now 39pc ahead compared with a market up 30pc.
However, investors should also have received a 100p special dividend at the end of last year, bring the return to 57pc.
The shares are trading on a December 2010 earnings multiple of 14 times, falling to 12.6 next year, and the average price target of analysts monitored by Bloomberg is 751¾p, which is close to the current share price.
A profit isn't a profit until it is put in the bank, and therefore Questor says sell.