Posts In: Stock Ideas

Geoff Gannon April 24, 2020

Otis (OTIS): The World’s Largest Elevator Company Gets the Vast Majority of Its Earnings From Maintenance Contracts With a 93% Retention Rate

Otis Worldwide (OTIS) is the world’s biggest elevator and escalator company. Like Carrier (CARR) – which I wrote up two days ago – it was spun-off from United Technologies. However, shareholders of United Technologies received one share of Carrier for each share of United Technologies they had while they only received half a share of Otis for every one share of United Technologies they owned. As a result, the market caps of Carrier and Otis would be the same if the share price of Otis...

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Geoff Gannon April 22, 2020

Carrier (CARR): A Big, Well-Known Business that Just Spun-off as a Cheap, Leveraged Stock

Carrier (CARR) is a recent spin-off from United Technologies. The company has leading brands in Heating, Ventilation, and Air Conditioning (HVAC), fire & safety, and refrigeration. The best known brand is the company’s namesake: “Carrier”. About 60% of profits come from HVAC. About 30% of  profits come from fire/safety. And about 20% of sales and profits come from refrigeration. Although you may be familiar with the Carrier name in terms of residential air conditioning – there are just under 30 million residential Carrier units in...

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Geoff Gannon April 20, 2020

Mills Music Trust (MMTRS): A Pure Play Decades Long Stream of Future Royalties on Old-Timey Songs Available at More Than an 8% Pre-Tax Yield

Mills Music Trust (MMTRS) is an illiquid, over-the-counter stock. In fact, it’s not a stock at all. The security traded is a “trust certificate” that entitles the holder to quarterly distributions from the trust. These “dividends” are not dividends. The trust has not paid taxes on the income. So, you will be taxed on the income received. As a result, you’ll need to adjust the after-tax return on Mills Music Trust as compared to other stocks you might own. Since I don’t know your tax...

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Geoff Gannon April 13, 2020

Interpublic (IPG): An Ad Agency Holding Company Trading at 10 times Free Cash Flow and Paying a Nearly 7% Dividend Yield

Interpublic (IPG) is one of the big ad agency holding companies around the world. Other examples include Omnicom (also a U.S. company), WPP (a U.K. company), Publicis (a French company), and Dentsu (a Japanese company). There are countless other publicly traded advertising stocks. Some are affiliated with one of those big groups. Others aren’t. Interpublic might be the first real ad agency holding company. The name Interpublic dates back to 1961. If you read the 10-K, you’ll notice PriceWaterhouse has been auditing Interpublic’s financials since...

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Geoff Gannon April 10, 2020

Miller Industries: A Pretty Good, But Very Cyclical Business that Sells its Car Wreckers and Car Carriers Through a Loyal Distributor Base

Miller Industries (MLR) has a lot of things to like about it. But, the timing of buying this stock now definitely isn’t one of them. Miller is in a very cyclical, highly durable capital good industry – it produces “car wreckers” and “car carriers” – that depends heavily on business confidence and especially access to capital. It is very easy to defer the purchase of a new wrecker or carrier. And it is very hard – impossible, really – to sell wreckers or carriers without...

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Geoff Gannon April 6, 2020

Hamilton Beach Brands (HBB): A Simple Business and a Super Cheap Stock Facing a Tough Cash Situation in 2020

Hamilton Beach Brands (HBB) looks like a cheap stock. As I write this, the stock is trading at $8.71 a share. The company – or, at least the continuing part of the company now that Kitchen Collection is gone – earned anywhere from $1.50 to $2.00 a share over the last 3 years. That puts the P/E ratio at something like 4-6. Other ways to look at the stock include pricing it off of its EBIT or free cash flow. Over the last 5 years,...

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Geoff Gannon April 3, 2020

Hanesbrands (HBI): A Very Cheap, Very Leveraged Stock That’s #1 in an Industry that Changes So Little Even Warren Buffett Loves It

Hanesbrands (HBI) has gotten very cheap lately. In fact, the stock is back at prices that are pretty close to where it was spun-off from Sara Lee back in 2006. I talked a little about the stock back then. It was a spin-off I liked – I haven’t found many of those lately – and I’d assume the business has become more valuable over the last 14 years, not less. We’ll see if that’s true. The business hasn’t changed much in 14 years. Hanesbrands acquired...

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Geoff Gannon April 1, 2020

Bunzl (BNZL): A Distributor with 20 Straight Years of EPS Growth and 27 Straight Years of Dividend Growth – Facing a Virus That’ll Break At Least One of Those Streaks

Bunzl (BNZL) is a business I’ve known about for a long time. However, it’s not a stock I’ve thought I’d get the chance to write about. The stock is not overlooked. And it rarely gets cheap. EV/EBITDA is usually in the double-digits. It had a few years – the first few years of the recovery coming out of the financial crisis – where the EV/EBITDA ratio might’ve been around 8 sometimes. It’s back at levels like that now. Unfortunately, the risks to Bunzl are a...

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Geoff Gannon February 20, 2020

Gainsco (GANS): A Dark Nonstandard Auto Insurer That’s Cheap Based on Recent Underwriting Results

Gainsco (GANS) is a dark stock. It does not file with the SEC. However, it does provide both statutory (Gainsco is an insurer) and GAAP financial reports on its website. These reports go back to 2012 (so, covering the period from 2011 on). Not long before 2011, Gainsco had been an SEC reporting company. Full 10-Ks are available on the SEC’s EDGAR site. Anything I’ll be talking about with you here today about Gainsco’s historical financial performance has been cobbled together through a combination of...

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Geoff Gannon February 5, 2020

Transcat (TRNS): A Business Shifting from Distribution to Services and a Stock Shifting from Unknown and Unloved to Known and Loved

Transcat is an interesting stock for me to write-up, because I probably have a bias here. Quan and I considered this stock – and researched it quite a bit – several years back. We were going to write it up for a monthly newsletter I did called Singular Diligence. All the old issues of this newsletter are in the stocks “A-Z” section of Focused Compounding. And – you’ll notice, if you go to that stocks A-Z section of Focused Compounding – that there’s no write...

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