Waters Corporation (WAT)

Waters makes the instruments that separate a mixture into its parts and identify what is in it.

A chromatograph and a mass spectrometer sit in the laboratories of pharmaceutical companies, where every batch is checked before release. The analytical method is registered together with the medicine and tied to a specific instrument — replacing it means going through regulatory approval again.

Hence the economics of the installed base: a machine lasts a decade while columns, reagents and service are bought continuously and supply more than half the revenue at high margins. New instrument sales are cyclical and depend on laboratory capital budgets. Risks: demand in China and biotech funding. The company pays no dividend, directing cash into buybacks.