By Robert Swift

There is a strange quality to the current market conversation. Roughly every second equity story that crosses the desk this year is some variation on artificial intelligence, GPU demand, hyperscaler capex, or the next great compute cycle. Some of this is justified. The capital being spent on AI infrastructure is real, the demand profile of large models is real, and the productivity story will probably turn out to be real too, even if the timing and the recipients of the benefits look rather different in 2030 than the consensus today expects.

But this preoccupation with one theme, however genuine, has a habit of starving sensible investors of attention for other things. A portfolio fully exposed to a single thematic, no matter how good the thematic, is not a portfolio. It is a concentrated bet dressed up in diversification language. And when the discount rate moves the wrong way, or the capex cycle disappoints, or the geopolitical backdrop shifts in a way that nobody priced for, the concentration shows.

What follows is a brief look at three businesses we hold or have recently added to portfolios. None of them are AI. None of them are technology in any meaningful sense. All three are doing something useful, generate cash, are run by management teams that appear awake, and trade at multiples that do not require heroic forecasts to support. In other words, they are the kind of boring businesses that quietly compound when the more glamorous parts of the market are busy reminding investors that gravity still applies.

SATS Limited (SGX: S58)

SATS sits at the unfashionable intersection of aviation ground handling, air cargo, inflight catering, and a growing range of institutional food and hospitality services. The business operates across Singapore, the wider Asia Pacific, the Americas, Europe, the Middle East and Africa, with the headline asset being its dominant position at Changi, the world’s most consistently well run major aviation hub.

The FY26 results, released on 25 May, were materially better than the consensus expected. Revenue reached a record S$6.35 billion, up 9 per cent on the prior year. Net profit rose 17 per cent to S$285.2 million. Gross debt to EBITDA improved from 3.7 times to 3.3 times. And the final dividend was lifted to 5.0 cents per share, taking the full year payout to 7.0 cents, an increase of roughly 40 per cent on the prior year.

It is worth dwelling on that dividend move for a moment. In Singapore, a 40 per cent lift in distributions is not a casual decision. It is a signal from a board that has reviewed the balance sheet, the operating outlook, and the capital plan, and concluded that the business is generating more than enough cash to fund growth and return more to shareholders. Singapore companies do not lift dividends to flatter the share price. They lift them because the numbers comfortably support it. Watch the dividend in any Temasek influenced business and you will usually learn more than from the management commentary.

The Middle East situation has been a complicating factor. Flight cancellations, rerouted cargo, higher fuel costs, and disrupted supply chains all weighed on the fourth quarter. The good news is that SATS’s global network has actually benefited from some of the disruption. Cargo flows rerouted away from disrupted Middle Eastern hubs have been picked up by SATS’s facilities in Singapore, North America and Europe. Changi, in particular, has become structurally more important as a transit point for both passenger and freight traffic around the affected region. A world in which Hormuz remains contested is a world in which Singapore matters more, not less.

The growth pipeline is also more diversified than the inflight catering legacy might suggest. The Aviapartner cargo acquisition is contributing meaningfully. The expansion into non aviation food services for institutions, hospitality and the defence sector is gathering pace, including the recently demonstrated logistics capability for Exercise Wallaby. The pivot from a Singapore centric airline caterer to a global aviation services and food solutions group is now well advanced, and the financial results are starting to reflect it.

On valuation, SATS trades at around 21 times current year earnings and 18 times next year, with the multiple compressing as the deleveraging benefits flow through. EV/EBITDA at around 7.5 times is undemanding for a business with this kind of structural position. The dividend yield is modest at 1.8 per cent but the rate of growth is what matters. We see a quality compounder with a global infrastructure backbone, structural tailwinds from supply chain reshoring and aviation recovery, and a balance sheet that has just been visibly strengthened by management with capital discipline. The kind of business it is hard to build, easy to underestimate, and difficult to replicate.

Encompass Health Corporation (NYSE: EHC)

Encompass Health operates the largest network of inpatient rehabilitation hospitals in the United States and Puerto Rico, providing specialised post acute care for patients recovering from major injury or illness. Stroke. Spinal cord injury. Hip replacement. Cardiac surgery. The kinds of clinical pathways where intensive rehabilitation makes a measurable difference to long term outcomes, and where the alternative to specialist inpatient care is poorer recovery, longer hospital stays, and higher overall costs to the health system.

The investment case is built on three structural drivers that are unlikely to reverse. American demographics, with the over 65 population continuing to grow at roughly double the rate of the total population. The continued shift toward post acute specialisation, as health systems realise that acute care hospitals are an expensive place to convalesce. And the genuine scarcity of high quality inpatient rehabilitation capacity in many US markets, which keeps occupancy rates high and gives Encompass meaningful pricing leverage with both Medicare and private insurance.

The recent share price weakness has been driven by two specific concerns. The first is reported pressure from large health insurance companies pushing for more aggressive pricing rebates on post acute services. The second is the broader uncertainty around Medicare policy under the current administration, with Robert Kennedy Jr’s department signalling potential changes to several elements of the program. Both of these concerns are real. Neither, in our view, breaks the long term thesis.

The reason is that Encompass operates in a structurally undersupplied part of the US healthcare system. The company is currently expanding capacity, with seven new hospitals planned. Occupancy rates are high. Margins are healthy. EBITDA margins reached 23.3 per cent in FY25 and are expected to remain above 21 per cent through the cycle. EBIT margins are running close to 18 per cent. And critically, the company has been raising guidance through 2026, not lowering it. EBITDA and EPS forecasts have moved up, even as the share price has moved down. That is the kind of dislocation that creates opportunities for investors willing to look past the immediate news flow.

Valuation has compressed accordingly. Encompass trades at roughly 17 times current year earnings and around 16 times next year, with a price to sales ratio of just 1.6 times. For a healthcare services business with double digit revenue growth, expanding margins, raising guidance, and a clear path to capacity expansion, this is not a demanding multiple. The 12 month analyst price target average sits at $140.50 against a current share price around $103. The dividend yield is modest at 0.74 per cent but the company has a long record of capital return through buybacks and selective dividend increases.

We do not pretend that the Medicare risk is zero. Policy changes are genuinely difficult to forecast, and the rebate pressure from insurers is a real margin headwind. But the business is structurally well positioned, the management team has navigated multiple Medicare cycles, the balance sheet is reasonable, and the demographic backdrop is undeniable. At a time when the technology sector demands ever more aggressive growth forecasts to justify multiples that already assume miracles, owning a healthcare business with raising guidance at 17 times earnings looks rather sensible by comparison. We particularly like the contrast with the so called Magnificent Seven, where we now have virtually no exposure on valuation grounds. Encompass offers a different profile entirely: structural growth, dependable margins, a real asset base, and a multiple that allows for ordinary disappointments without permanent capital loss.

Aena S.M.E., S.A. (BME: AENA)

Aena is the world’s largest airport operator by passenger volume. It operates 46 airports and two heliports across Spain, holds majority stakes in 17 airports in Brazil, owns Luton Airport in the United Kingdom, and has additional interests in Mexico and Colombia. The Spanish government, through ENAIRE, retains a 51 per cent stake. The remaining shareholder base is dominated by global institutional investors including BlackRock, Veritas Asset Management, and Goldman Sachs.

The simple version of the investment case is that Aena is a near monopoly on Spanish air travel, a country that has positioned itself as the dominant European tourism destination over the past decade. Spain received over 90 million international visitors in 2024 and the numbers have continued to climb. Madrid Barajas, Barcelona El Prat, the Canary Islands airports, and the Balearics network all sit inside Aena’s portfolio. The business has the pricing power that comes with monopoly position, the long term concession structure that provides revenue visibility, and the operating leverage that comes with high fixed cost infrastructure.

The financials reflect the quality of the asset base. Revenue grew 20.4 per cent in 2023, 14.6 per cent in 2024, and 8.8 per cent in 2025, reaching €6.3 billion. EBITDA margins are now running above 58 per cent and are expected to expand further to roughly 60 per cent over the forecast period. Net income margins approach 35 per cent. The business is fundamentally a real estate operation with airline ground rents, retail concessions, and parking fees as the underlying revenue streams. Anyone who has paid for parking at Madrid or Barcelona will recognise the pricing power instinctively.

Critically, Aena is not a Middle East victim. Its passenger base is dominated by intra European travel, North American visitors to Spain, and Latin American flows through Madrid. The Strait of Hormuz situation is not material to the underlying business. If anything, the geopolitical disruption to Middle Eastern hubs has made Madrid a more important transit point for certain South American to European flows, which is helpful at the margin.

The balance sheet is also notable. Net debt to EBITDA sits at around one times, materially below the European listed airport peer group where two to three times is closer to the norm. This is the operating discipline that comes with majority Spanish government ownership and a board that values cash flow generation over financial engineering. It also gives the business meaningful capacity to fund growth, return capital, or absorb shocks without distress.

On valuation, Aena trades at roughly 16 times current year earnings and around 10 times EV/EBITDA. The dividend yield is 4.4 per cent, paid out of genuinely high quality cash flows. This is not a screaming bargain, but it is a reasonable price for a global infrastructure asset with a near monopoly position, structural tourism tailwinds, conservative leverage and double digit free cash flow yields once you adjust for maintenance capex. Compare that with what you pay for any number of US listed AI infrastructure proxies and the relative attractiveness becomes clear.

A note on Luton. Owning Luton Airport is the sort of thing that prompts wry comment from anyone who has actually been through it. The terminal is small. The infrastructure is older than ideal. The reputation is, to put it mildly, not in the same conversation as Heathrow or Madrid. But Luton sits in a structurally short London airport capacity environment, has continued to grow passenger volumes, and is an opportunity for capacity investment that the British government has been notably reluctant to grant to the larger airports. The fact that Aena bought it cheaply and is improving it incrementally is probably a better outcome than the alternative of leaving it to drift. Investors who can put aside their personal experience of arriving at gate 24 at 2 a.m. on a delayed Ryanair flight may find themselves rewarded.

A common thread

What ties these three businesses together is not sector. It is character.

Each one is a structural participant in something useful that the global economy will continue to need regardless of what happens to large language models. People will continue to travel through Singapore. Americans will continue to need post acute rehabilitation as they age. Tourists will continue to fly into Spain. None of these demand functions depend on a successful AI investment cycle, a particular discount rate, or a benign geopolitical outcome.

Each one is run by a management team that has demonstrated capital discipline. SATS is deleveraging meaningfully while growing. Encompass is funding expansion from operating cash flow rather than equity dilution. Aena maintains conservative leverage in a sector where peers routinely run two or three times the debt. In a market environment where capital discipline has become genuinely scarce, this matters more than it usually does.

And each one trades at a multiple that does not require optimism to justify. SATS at 18 times next year earnings. Encompass at 16 times. Aena at 16 times current year and 10 times EBITDA. These are not bargain basement valuations, but they are reasonable prices for genuinely good businesses, and they allow for the ordinary disappointments of business life without inflicting permanent damage on the long term return.

Risks

A few honest risks before concluding.

SATS is exposed to global passenger traffic, cargo volumes and fuel prices. A meaningful recession, a sustained Middle East escalation that disrupts global aviation more broadly, or a sharp rise in input costs would all hurt margins. The deleveraging story is sound but the business is still in transition from the WFS acquisition and execution risks remain.

Encompass faces real headwinds from Medicare policy uncertainty and insurer pricing pressure. The expanding capacity build has execution risk and capital intensity that the market may continue to underprice. A material policy change to the post acute care reimbursement model would be more damaging than current weakness suggests.

Aena is exposed to the European tourism cycle, which has been strong but is not infinite. A sustained European recession, a further deterioration in fuel costs that affects airline behaviour, or a sharp shift in Spanish regulation around tourism volumes would all affect the business. The Brazil and Luton exposures add operational complexity. And the 51 per cent ENAIRE ownership means the Spanish government retains real influence over how the business is run, which can be helpful or unhelpful depending on the political cycle.

None of these risks are deal breakers. All of them are reasonable to think about. The work for any sensible investor is to size positions appropriately, monitor the businesses through the cycle, and remember that the absence of a fashionable narrative is sometimes the most valuable feature an investment can have.

TAMIM Takeaway

Markets in 2026 have become unusually concentrated around a single thematic. Some of that concentration is justified by the genuine quality of the underlying businesses driving it. Most of it is the usual late cycle phenomenon of capital chasing the loudest story and forgetting that other parts of the economy still exist, still generate cash, still serve real needs, and still deserve a place in a balanced portfolio.

SATS, Encompass Health, and Aena are not exciting in the way the AI infrastructure story is exciting. None of them will be on a magazine cover this year. None of them will generate the kind of share price moves that make for compelling dinner party stories. What they will do, in our view, is what good long term businesses have always done. Compound earnings through cycles. Return cash to shareholders sensibly. Hold up reasonably well when the rest of the market is being repriced by macro forces that have nothing to do with the underlying business.

The investors who do best over long horizons are rarely the ones who own the most fashionable portfolio at any particular moment. They are the ones who built portfolios that work across regimes, that contain businesses they understand, that pay reasonable prices for above average quality, and that do not depend on a single thematic continuing forever. In a year when AI has dominated the conversation, owning some businesses that have nothing to do with AI is not a contrarian gesture. It is basic portfolio construction. That, plus a reasonable cash flow yield, plus management teams that respect their own balance sheets, will probably do more for long term returns than chasing the next variant of the same trade everyone else is already in.

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Disclaimer: SATS Limited (SGX: S58), Encompass Health Corporation (NYSE: EHC) and Aena S.M.E., S.A. (BME: AENA) are held in TAMIM portfolios as at the date of article publication. Holdings can change substantially at any time.