UL Solutions Inc. (ULS): A Bull Case Theory

We came across a bullish thesis on UL Solutions Inc. (ULS) on Kairos Research’s Substack. In this article, we will summarize the bulls’ thesis on ULS. UL Solutions Inc. (ULS)’s share was trading at $70.14 as of 10^th June. ULS’s trailing and forward P/E were 42.25 and 40.98 respectively according to Yahoo Finance.

UL Solutions operates in the Testing, Inspection, and Certification (TIC) industry with a powerful combination of brand trust, regulatory entrenchment, and global scale. The UL mark, one of the world’s most recognized safety certifications, is stamped on billions of products annually and viewed as synonymous with trust.

This branding advantage, reinforced by a 99% retention rate among its top 500 customers, is difficult to replicate. UL’s regulatory moat is equally compelling—it is embedded in over 1,300 standards committees, contributes to more than 1,700 safety standards via its sister organization UL Standards & Engagement, and participates in mandatory certification processes often linked to building codes and insurance requirements. This ecosystem of standards creation, technical research, and product certification creates a self-reinforcing loop of recurring revenue and technical leadership.

The company’s growth strategy is three-pronged: organic growth through cross-selling and new industry verticals, inorganic expansion via disciplined M&A in a fragmented market, and long-term EBITDA margin expansion, with a target of 24%. It has acquired 56 companies since 2010, while keeping leverage under control.

Financially, UL Solutions is stable and profitable, with ~20% EBITDA margins, high customer stickiness, and 6–7% revenue growth. Yet, valuation remains rich at ~17x EV/EBITDA, a premium to peers. Risks include pricing pressure from global competitors, AI-enabled disruption, and over-reliance on regulatory tailwinds.

Furthermore, governance concerns arise from UL Standards & Engagement’s dominant ownership, which limits investor influence. While this is a high-quality compounder with structural advantages, its current valuation and ownership dynamics may give some investors pause absent a wider margin of safety.

Previously, we covered a standout bullish thesis on Acuren (TIC) from the same author, which framed its NV5 merger as transformative, driving scale, cross-selling synergies, and EBITDA uplift. Kairos’s take on UL Solutions (ULS) instead emphasizes structural moats from branding and regulation. Both bets hinge on consolidation and durability, but only UL presents as a pure-play compounding platform.

UL Solutions Inc. (ULS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held ULS at the end of the first quarter which was 36 in the previous quarter. While we acknowledge the risk and potential of ULS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.