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Allegiant Travel

1/26/2016

0 Comments

 
Allegiant Travel is more than a low cost airline, it's also a travel agent. But it's a very specialized one. Unlike most airlines, it doesn't emphasize selling high priced tickets to high paying business travelers. They specialize on leisure travelers looking for the best deal while heading toward fun locations. And they have a lot of processes in place that are stealing that market from the big guys.
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​Allegiant Travel Company, a leisure travel company, focuses on the provision of travel services and products to residents of under-served cities in the United States. The company offers scheduled air transportation on limited frequency nonstop flights between under-served cities and leisure destinations. As of February 2, 2015, it operated a fleet of 53 MD-80 aircraft, 4 Airbus A319 aircraft, 9 Airbus 320 aircraft and 6 Boeing 757-200 aircraft provided services on 229 routes to 94 cities. The company also provides air-related services and products in conjunction with air transportation, including use of its call center for purchases, baggage fees, advance seat assignments, travel protection products, change fees, priority boarding, food and beverage purchases on board, and other air-related services. In addition, it offers third party travel products, such as hotel rooms, ground transportation, and attractions; and air transportation services through fixed fee agreements and charter service on a seasonal and ad-hoc basis. The company was founded in 1997 and is headquartered in Las Vegas, Nevada.
(Summary) (Company) (Chart)
24 January 2016
Price $160.51
1yr Target $203.33
Analysts 12
Dividend $1.20
Payout Ratio 12.10%

1yr Cap Gain 26.67%
Yield 0.62%

1yr Tot Return 27.29%
​
EPS (ttm) $9.91
EPS next yr $13.52
EPS next 5yr 35.18%
1yr Price Support $475.63
P/E 16.20
PEG 0.46
Beta -0.06
Market Cap $2.70 Bil
Revenues $1.23 Bil
Earnings $168.00 Mil

Profit Margin 13.65%
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1yr EarnGR 161.72%
3
yr EarnGR 45.76%
5yr EarnGR 30.81%
1yr DivGR 20.00%
3yr DivGR ---
5yr DivGR ---
Quick Ratio 1.10
Current Ratio 1.10
Debt/Equity 1.90
ROA 18.00%

ROE 74.10%
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​The Business of Allegiant Travel


Allegiant is a leisure travel company focused on providing travel services and associated products to travelers located in under-served cities in the US. The company was founded in 1997 and, in conjunction with our initial public offering in 2006, the company incorporated in the state of Nevada. Allegiant's unique business model delivers diversified revenue streams from various travel service and product offerings which which is somewhat unique to other travel companies. In addition to operating a low-fair passenger airline marketed to price sensitive leisure travelers on a standalone basis, the company sells bundled travel packages which can include the sale of air-related and third party services and products. Allegiant's developed route network, pricing philosophy, advertising, and product offerings focused on sending customers to premier leisure destinations are all intended to appeal to leisure travelers and make it attractive for them to purchase both travel services and additional products from the company. 

Travel related services and products:

Scheduled service air transportation. As of February 2015, Allegiant's operating fleet consisted of 53 MD-80 aircraft, 11 A320 series aircraft, and six Boeing 757-200 aircraft providing service on 229 routes to 94 cities. Based on Allegiant's recent announcements and expectations, its expected that service will have expand to 271 routes and 105 cities by the end of 2015. 

Air-related ancillary products and services. Allegiant keeps airfares low by providing unbundled air-related services and products in conjunction with air transportation for an additional cost to customers thus allowing the customer to choose which services they deem of value. These optional air-related services and products include baggage fees, advance seat assignments, Allegiant's own travel protection product, change fees, use of the Allegiant call center for purchases, priority boarding, food and beverage purchases on board, and other air-related services. 

Third party ancillary products and services. Allegiant offers third party travel products such as hotel rooms, ground transportation (rental cars and hotel shuttle products) and locality based attractions (show tickets) for sale to their passengers. 

Fixed fee contract air transportation. Allegiant provides air transportation through fixed fee agreements and charter service on a year-round and ad-hoc basis. 

Other revenue. This segment consists principally of lease payments on aircraft or engines that the company owns and currently being leased to third parties. Allegiant may choose to temporarily act as a lessor for that equipment when they have opportunistically acquired aircraft or engines while on lease to a third party. Upon the expiration of the lease the company usually operates the assets themselves. 


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Allegiant Travel's Unique Business Model
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​Traditional Airline Approach 
  1. Focus on business travelers 
  2. Provide high frequency service from big cities 
  3. Use smaller aircraft to provide connecting service from smaller markets through hubs 
  4. Sell through various intermediaries 
  5. Offer flight connections 
  6. Use code-share arrangements to increase 
    passenger traffic

​Allegiant Approach 
  1. Focus on leisure travelers
  2. Provide low frequency service from small and 
  3. medium-sized cities
  4. Use larger jet aircraft to provide nonstop 
  5. service from under-served cities direct to leisure 
  6. destinations
  7. Sell only directly to travelers
  8. No connecting flights offered
  9. Do not use code-share arrangements

Allegiant has established a route network with a national footprint, providing service on 229 routes between 81 under-served cities and 13 leisure destinations. In most of these cities, the company provides service to more than one leisure destination. The company currently provides service to the popular leisure destinations of Las Vegas, Nevada; Orlando, Florida; Phoenix, Arizona; Tampa/St. Petersburg, Florida; Los Angeles, California; Ft. Lauderdale, Florida; Punta Gorda, Florida; the San Francisco Bay Area, California; Honolulu, Hawaii; Palm Springs, California; and West Palm Beach, Florida. They also provide service on a seasonal basis to San Diego, California, and Myrtle Beach, South Carolina, and have recently commenced service to New Orleans, Louisiana and Jacksonville, Florida.

The geographic diversity of their route network protects them from regional variations in the economy and helps to insulate the company from competitive actions, as it would be difficult for a competitor to materially impact the company's business by targeting one city or region. Allegiant's widespread route network also contributes to the continued growth of their customer base.

In developing this unique business model, the company's ancillary offerings, including the sale of third party products and services, have been a significant source of total operating revenue growth. Allegiant has increased ancillary revenue per passenger from $5.87 in 2004 to $45.93 in 2014.

Allegiant owns and manages their own air reservation system giving them the ability to modify their system to enhance product offerings based on specific needs of their customers without being dependent on non-customized product upgrades from outside suppliers. That also believe that the control of their automation systems has allowed them to be innovators in the industry by providing their customers with a variety of different travel services and products.



Strengths of this Unique Business Model

Allegiant believes that small and medium sized cities represent a large, under-served, market, especially for leisure travel. Prior to the initiation of their service, leisure travelers from these markets had limited desirable options to reach leisure destinations because existing carriers generally focused on connecting business customers through their hub-and-spoke networks. Allegiant has recently begun to serve many of these medium sized cities which those major carriers have reduced service and Allegiant is now filling that void with limited or direct nonstop competition.

These factors provide the company with significant growth opportunities in both small and medium-sized markets. The company believes that their nonstop service, along with low prices and leisure company relationships, make it attractive for leisure travelers to purchase travel services and products from Allegiant. The size of these markets, and Allegiant's focus on the leisure customer, allows the company to adequately serve our markets with less frequency and to target and vary their air transportation capacity to match seasonal and day of the week demand patterns.

By focusing on under-served cities the company avoids the intense competition in high traffic domestic air corridors. In most of their typical small and medium-sized markets, travelers previously faced high airfares and cumbersome connections or long drives to major airports in order to reach their leisure destinations. Based on published data from the U.S. Department of Transportation (‘‘DOT’’), Allegiant believes that the initiation of their service stimulates demand. There's typically a substantial increase in traffic subsequent to initiating new service. 

Capacity Management

The aggressive management of seat capacity includes increased utilization of the company's aircraft during periods of high leisure demand and decreased utilization in low leisure demand periods. Management of seat capacity also includes changes in weekly frequency of certain markets based on identified peak and off-peak travel demand throughout the year. Unlike other carriers which provide a fairly consistent number of flights every day of the week, we concentrate our flights on high demand leisure travel days and fly only a very small portion of our schedule on low demand days such as Tuesdays and Wednesdays.

The company's strong ancillary revenue production, coupled with the ability to spread costs over a larger number of passengers, has allowed Allegiant to operate profitably throughout periods of high fuel prices and economic recession. The company prices their fares and actively manages their capacity to target a 90 percent load factor. In addition, their low aircraft ownership costs facilitate their ability to adjust service levels quickly, and maintain profitability during difficult economic times.

Low Cost Structure

Allegiant believes a low cost structure is essential to competitive success in the airline industry. Their operating expense per available seat mile or operating CASM was 10.95¢ and 10.33¢ in 2014 and 2013, respectively. They continue to focus on maintaining low operating costs through the following tactics and strategies:

Cost-driven schedule. Allegiant designs their flight schedule to concentrate their aircraft each night at crew bases which allows them to better utilize personnel, airport facilities, aircraft, spare parts inventory, and other assets. They believe leisure travelers are generally less concerned about departure and arrival times than business travelers so they are able to schedule flights at times that enable the company to reduce costs while remaining desirable.

Low aircraft ownership costs. Allegiant believes properly balances low aircraft ownership costs and operating costs to minimize their total costs. As of February 2015, the company's operating fleet consisted of 53 MD-80 series aircraft, 11 Airbus A320 series aircraft, and six Boeing 757-200 aircraft and their fleet has been substantially less expensive to acquire than newer narrow body aircraft.

Simple product. Allegiant believes that offering a simple product is critical to achieving low operating costs. As such, they sell only nonstop flights. They do not code-share or interline with other carriers, they have a single class cabin, they do not provide any free catered items, they do not overbook our flights, they do not provide cargo or mail services, and they do not offer other perks such as airport lounges.

Low distribution costs. Their nontraditional marketing approach results in very low distribution costs. They do not sell their product through outside sales channels thus avoiding the fees charged by travel web sites (such as Expedia, Orbitz or Travelocity) and traditional global distribution systems (‘‘GDS’’) (such as Sabre or Worldspan). Allegiant's customers purchase their travel only at the company's airport ticket counters, on their website or through their telephone reservation center. 

Small and medium-sized city market airports. Allegiant's business model focuses on residents of small and medium-sized cities in the US where the airports have lower operating costs driven by less expensive passenger facilities, landing, and ground service charges. In addition, many of those airports provide marketing support which results in lower marketing costs.

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Ancillary product offerings

Allegiant believes that most leisure travelers are concerned primarily with purchasing air travel for the least expensive price so they have unbundled the air transportation product by charging fees for services that many U.S. airlines historically bundled in their ticket price . Allegiant offers instead a simple base product at an attractive low fare which enables the company to stimulate demand and generate incremental revenue as customers pay additional amounts for conveniences they value. Allegiant does not offer complimentary advance seat assignments but for customers who value this product they can purchase advance seat assignments for a small incremental cost. In addition, snacks and beverages are sold individually on the aircraft, allowing passengers to purchase only items they value.

Allegiant's third party product offerings give customers the opportunity to purchase hotel rooms, rental cars, airport shuttle service, show tickets, and other attractions at the time they book their tickets. Third party offerings are available to customers based on agreements with various travel and leisure companies. Allegiant has direct contracts with more than 540 hotel and casino resort properties throughout the country, which allow the company to provide hotel rooms as part of a travel package for their customers. In addition, the company has an exclusive agreement with Enterprise Holdings Inc. for rental cars packaged with air travel. And the pricing and margin of each product can be adjusted based on customer demand because our customers purchase travel through Allegiant's booking engine without intermediaries.

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Strong Financial Position

As of December 31, 2014, Allegiant had $416.8 million of unrestricted cash, cash equivalents and investment securities, and total debt of $593.1 million. The company also prepaid their $125.0 million senior secured term loan facility (‘‘Term Loan’’), scheduled to mature in 2017. Their ability to generate operating cash flows with their capital structure has allowed them to grow profitably for 12 consecutive years. 


Routes and Schedules

Allegiant's current scheduled air service (including seasonal service) consists of limited frequency, nonstop flights into Las Vegas, Orlando, Phoenix and other Florida, and California destinations from under-served cities across the continental US. Scheduled service route network as of February 2015 were:

 50 - Routes to Orlando 
 44 - Routes to Las Vegas
 34 - Routes to Phoenix 
 35 - Routes to Tampa Bay/St. Petersburg
 22 - Routes to Punta Gorda
 19 - Routes to Los Angeles
 25 - Other routes 

229 - Total routes


Marketing and Distribution
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Allegiant's website is their primary distribution method but they also sell through their call center and at our airport ticket counters. This distribution mix creates significant cost savings and enables them to continue to build loyalty with their customers through increased interaction with them. Allegiant is also able to utilize customer email addresses in their databases which also provides multiple cost effective opportunities to market products and services. In addition, Allegiant markets products and services to their customers during the flight. Allegiant believes that the breadth of options they offer allows them to provide a ‘‘one-stop’’ shopping solution to enhance the customer’s travel experience.

Their low cost distribution strategy results in reduced expenses by avoiding the fees associated with the use of GDS distribution points. This distribution strategy also permits the company to closely manage ancillary product offerings and pricing while developing and maintaining a direct relationship with their customers. This continuous communication results in substantial benefits over time. And using there own automation system, they have the ability to continually change product offerings and pricing points, which allows them to find the optimal pricing levels for various product offerings.
​

My Perspective

While I've never been a big fan of the major airlines I've always been favorable toward those smaller airlines that have found a niche in the travel industry. I'm an owner of Southwest Airlines stock and accumulating shares of Alaska Airlines has always intrigued me, but Allegiant Travel is really a unique situation with the potential to be a big winner. Allegiant seems to be doing everything right and it shows in its fundamentals. 

Allegiant has identified a specific segment of the travel industry, designed a service to meet the needs of that segment, and then expands into every aspect of that specific business. They've also gotten close to their customers and designed their business around their needs rather than following the precedents set by the majors. 

​With an extremely high estimated five year earnings growth rate over 35%, a P/E ratio of only 16 and a PEG of only 0.46, this stock may be poised to move significantly higher over the next few years. Add in a payout ratio and the company's small dividend yield may be in for improvements similar to the expected increases in earnings. And that's music to any dividend growth investors ears!

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0 Comments

Johnson Outdoors

1/20/2016

0 Comments

 
Johnson Outdoors is one of three companies owned and controlled by the S.C. Johnson Company and it is the only one that is publicly owned. Unlike the other two companies, Johnson Outdoors is not a wholly owned subsidiary of the Johnson Family Enterprises but rather a publicly traded company that is listed on the Nasdaq. The company manufactures a wide range of outdoor recreational products including camping gear, fishing equipment, and watercraft. 

As a result of being a public company, Johnson Outdoors' financial reports are made readily available to the public. At the end of the third quarter of 2015, the company's shareholder equity was $$197.9 million and net income during the same period was $1.1 million. In the previous year, Johnson Outdoors recorded a gross and net profit of $17 million and $10.1 million respectively. ​


The other two companies making up the Johnson Family Enterprises are S.C. Johnson & Son and Johnson Financial Group. With operations in more than 70 nations and products sold in "virtually every country around the world", S.C. Johnson & Son, Inc. could be considered the crown jewel of the Johnson Family. The company came into existence in 1886 when a furniture salesman by the name of Samuel Curtis Johnson purchased a small Wisconsin-based flooring business that he happened to work for. Today S.C. Johnson has grown into an internationally recognizable manufacturer of cleaning supplies and other consumer chemicals. The company has approximately 13,000 people and is behind various popular household names such as Baygon, Windex, Pledge and Ziploc.

The Johnson Financial Group is another privately held company that is owned by the S.C. Johnson family. The subsidiary was founded in 1970 by Samuel Charles Johnson Jr., who led the S.C. Johnson group of companies during its fourth generation of family leadership. Over the last three decades, Johnson Financial Group has grown from a staff of three operating in a trailer to the largest family owned bank in the State of Wisconsin. The company currently employs more than 1,000 people and provides a wide-range of financial products and services to both individuals and businesses through its banking and insurance divisions. 

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​Johnson Outdoors Inc.
designs, manufactures, and markets outdoor equipment, diving, watercraft, and marine electronics products worldwide. The company's Marine Electronics segment provides battery-powered fishing motors for trolling or primary propulsion, marine battery chargers, and shallow water anchors; sonar and GPS equipment for fish finding, navigation, and marine cartography; and downriggers for controlled-depth fishing. This segment sells its products under the Minn Kota, Humminbird, and Cannon brands through outdoor specialty and Internet retailers, retail store chains, marine products distributors, original equipment manufacturers, and distributors. Its Outdoor Equipment segment offers consumer tents, commercial and military tents and accessories, sleeping bags, camping furniture, and other recreational camping products; portable outdoor cooking systems; and field compasses, as well as acts as a subcontract manufacturer for other providers of military tents. This segment sells its products under the Eureka!, Jetboil, and Silva brands through independent sales representatives and Internet retailers. The company's Watercraft segment provides kayaks, canoes, personal flotation devices, and paddles through independent specialty and outdoor retailers under the Necky, Ocean Kayaks, Old Town, Extrasport, and Carlisle brands. Its Diving segment offers underwater diving and snorkeling equipment consisting of regulators, buoyancy compensators, dive computers and gauges, wetsuits, masks, fins, snorkels, and accessories for recreational divers under the SCUBAPRO brand name. It also provides regular maintenance, product repair, diving education, and travel program services; and sells diving gear to dive training centers, resorts, search and rescue units, and armed forces. This segment sells its products through independent drive stores, as well as through Websites. Johnson Outdoors Inc. was founded in 1970 and is headquartered in Racine, Wisconsin.
(Summary) (Company) (Chart)
20 January 2016
Price $20.24
1yr Target $28.00
Analysts 1
Dividend $0.32
Payout Ratio 29.09%

1yr Cap Gain 38.33%
Yield 1.58%

1yr Tot Return 39.91%
​
EPS (ttm) $1.10
EPS next yr $1.59
EPS next 5yr 20.00%
1yr Price Support $31.80
P/E 18.40
PEG 0.92
Beta 1.04
Market Cap $202.20 Mil
Revenues $430.50 Mil
Earnings $10.60 Mil

Profit Margin 2.46%
​
1yr EarnGR 17.77%
3
yr EarnGR 0.95%
5yr EarnGR -4.49%
1yr DivGR 1.66%
3yr DivGR ---
5yr DivGR ---
Quick Ratio 1.90
Current Ratio 3.00
Debt/Equity 0.04
ROA 3.30%

ROE 5.50%
​
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​Johnson Outdoors turns ideas into adventure with innovative, market-leading outdoor recreational products. The Company combines the strength and efficiency of a large organization with the creativity and agility of a small entrepreneurial company. Founded in 1970 by Samuel C. Johnson, the Company has delivered double-digit compound annual revenue growth over its history, evolving from a single brand into a nearly $400 million global enterprise with nearly 1,300 employees across 16 countries.  

Johnson Outdoors designs, manufacturers and markets many of the world’s best known outdoor recreation brands. The Company’s award-winning innovation is fueled by a unique passion for the outdoors, coupled with sophisticated market research and cutting-edge technology, to advance a continuous pipeline of successful new products across four categories: Marine Electronics, Watercraft, Outdoor Gear and Diving.

New products have represented a third or more of total company revenues over the past six years, helping to sustain market-leadership positions in nearly a dozen categories, and garnering “best of the best” recognitions from major industry institutions and publications, like Field & Stream, Men’s Journal, National Geographic Adventure, Popular Science, Women’s Health and Paddler magazines, among others.  

Johnson Outdoors is moving forward to strengthen its competitiveness for sustained profitable growth. Significant reductions in costs and infrastructure, as well as dramatic improvements to efficiency, have enabled the company to continue to invest strategically in innovation and position Johnson Outdoors’ portfolio of market-leading brands for continued successes. 

Johnson Outdoors believes creating value goes beyond creating great products into creating the ultimate outdoor experience for their consumers. Their portfolio of premier, marketing-winning brands is known the world over for delivering on that promise, and includes, among others: 

Watercraft: Old Town® canoes and kayaks; Ocean Kayak™ and Necky® kayaks; Carlisle™ paddles; Extrasport® personal flotation devices 

Diving: SCUBAPRO® diving equipment; SUBGEAR® diving equipment

Marine Electronics: Minn Kota® motors and accessories; Humminbird® fishfinders; Cannon® downriggers; LakeMaster® maps and charts 

Outdoor Gear: Eureka!® tents and camping gear; Silva® digital instruments; Jetboil® personal cooking systems

​My Perspective


With so many great companies to choose from I'm afraid this company just doesn't get noticed. But it should be because this company is so connected to the rich heritage of the other Johnson Family Enterprises. This company is small but it is growing with an estimated earnings growth rate of 20% over the next 5 years. Combined with its recent pullback with the rest of the market and you have a situation where the stock in the company can almost double in the next year. Add in a dividend that's just starting to grow and this could be a sweet investment in the years ahead. But it's not one to go into blindly. It has a great heritage but a short history. I have no exposure to this area of the economy so this could be a very interesting investment. 

I'm in no hurry but I'll probably start a small portion in this company in the near future solely based on the record of the parent company/enterprise. I like to invest in management and I expect that this company does and will continue to have great management as long as it has the Johnson name as the company logo.
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0 Comments

Interface

1/19/2016

0 Comments

 
Interface, Inc., is the future of carpeting for both the home and the office. It's the world's largest manufacturer of modular carpet that needs minimal installation and can be done literally by anyone. By installing it as squares or planks, the carpet can be easily removed or replaced in a single afternoon. It's also easy for the home owner to redesign the look of the home's living space over and over again. The company was founded in 1973, and is based in Atlanta, Georgia.

In 1973, Carpets International was founded by Ray Anderson. In the same decade, Interface introduced GlasBac, a patented structured backing system that has become the industry standard for high-performance modular backings. They also introduced Intersept, a proprietary antimicrobial preservationsless.
  • In 1982, Carpets International becomes Interface Flooring Systems, Inc, and Compact Carpet of Canada was acquired and named Interface Flooring Systems Canada, Inc.
  • In 1994, Interface began designing products utilizing a "Less is More" philosophy, and reduces average consumption of fiber by 10% per square yard in just 12 months. That year founder Ray Anderson read Paul Hawken's book The Ecology of Commerce, and then delivered his first environmental speech, which began Interface's journey to sustainability. Interface then launched ReEntry, a carpet reclamation program.
  • In 1998, Interface introduced a carpet tile product made with 100% recycled nylon face fiber and a layer of 100% recycled vinyl material in the backing. The company also introduced NexStep polyurethane cushion backing. Interface introduces the Portable Creel System, resulting in yarn savings of one million dollars per year.
  • In 1999, Interface introduced the first online product catalog for carpet - TheSampleCenter.com.
  • In 2003, Interface becomes the first carpet company to receive Environmentally Preferable Product (EPP) certification for its products and the first company to introduce Climate Neutral product offering through its Cool Carpet program. The company also announced a partnership with Tricycle Inc. to dematerialize their product development and sampling processes on a global basis.
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​Interface, Inc.
designs, produces, and sells modular carpet products primarily in the Americas, Europe, and the Asia-Pacific. It offers modular carpets under the Interface and FLOR brands; and carpet tiles under the GlasBacRE brand name for use in commercial interiors, including offices, healthcare facilities, airports, educational and other institutions, hospitality spaces, and retail facilities, as well as residential interiors. The company also provides two-meter roll goods that are structure-backed for use in education, healthcare, and government markets; and an adapted version of its carpet tile for the healthcare facilities market, as well as offers carpet replacement, installation, and maintenance services. In addition, it offers proprietary antimicrobial chemical compound for interior finishes under the Intersept trademark; TacTiles carpet tile installation system; raised/access flooring products under the Intercell brand; and turnkey project management services for national accounts and other customers through its InterfaceSERVICES business, as well as sells traditional adhesives and products for carpet installation and maintenance. The company sells its products directly to end-users; and to architects, engineers, interior designers, contracting firms, and other specifiers through independent contractors or distributors, as well as sells its FLOR branded products through catalogs and Internet. It operates 21 stores under the FLOR brand name in the United States and Canada; and has product showrooms or design studios in United States, Canada, Mexico, Brazil, Denmark, England, France, Germany, Spain, the Netherlands, India, Australia, Norway, the United Arab Emirates, Russia, Singapore, Hong Kong, Thailand, and China. The company was founded in 1973 and is headquartered in Atlanta, Georgia.
(Summary) (Company) (Chart)
18 January 2016
Price $16.35
1yr Target $25.83
Analysts 6
Dividend $0.20
Payout Ratio 21.27%

1yr Cap Gain 57.98%
Yield 1.22%

1yr Tot Return 59.20%
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EPS (ttm) $0.94
EPS next yr $1.34
EPS next 5yr 33.10%
1yr Price Support $44.35
P/E 17.39
PEG 0.53
Beta 1.20
Market Cap $1.08 Bil
Revenues $1.03 Bil
Earnings $62.30 Mil

Profit Margin 6.01%
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1yr EarnGR 200.00%
3
yr EarnGR 129.11%
5yr EarnGR 53.55%
1yr DivGR 28.57%
3yr DivGR 25.70%
5yr DivGR 33.46%
Quick Ratio 1.60
Current Ratio 2.70
Debt/Equity .71
ROA 8.20%

ROE 20.00%
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My Perspective

The idea of carpet tiles is not new and Interface has plenty of competition as traditional carpet manufacturers branch out into the carpet tile business. In addition, the cost of design and innovation has caused its earnings to be a little volatile although positive. The business is also tied to the economy as a good portion of their business is to other businesses, so a business recession would impact earnings (as can be seen in the chart below). But I think that may be changing as their designs become more interesting to the DIY home remodeler. 

With the recent pullback of the stock (along with the rest of the market), an estimated earnings growth rate of 33%, and a nice increasing dividend, I expect to start a position in this company in the next few days. This company can easily support a P/E ratio greater than 17 so I expect the stock to rise as the P/E expands. Add in the growing dividend and this looks like a great idea. 
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0 Comments

Tyson Foods

1/14/2016

0 Comments

 
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Tyson Foods is an American multinational corporation based in Springdale, Arkansas, that operates in the food industry. The company is the world's largest processor and marketer of chicken, beef, and pork and annually exports the largest percentage of beef out of the United States. Tyson Foods is the second-largest food production company in the Fortune 500 and the second largest meat producer in the world, after Modelez International Inc. Is also, according to Forbes, one of the 100 largest companies in the United States. And unless you're a vegetarian, you've eaten most of the many foods produced and processed by this company.
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​Tyson Foods, Inc.
operates as a food company worldwide. It operates through four segments: Chicken, Beef, Pork, and Prepared Foods. The company raises and processes chickens into fresh, frozen, and value-added chicken products; processes live fed cattle and live market hogs; and fabricates dressed beef and pork carcasses into primal and sub-primal meat cuts, as well as case ready beef and pork, and fully-cooked meats. It also supplies poultry breeding stock; sells allied products, such as hide and meats; and manufactures and markets frozen and refrigerated food products, including pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, pizza crusts and toppings, flour and corn tortilla products, desserts, appetizers, prepared meals, ethnic foods, soups, sauces, side dishes, meat dishes, breadsticks, and processed meats. Tyson Foods, Inc. offers its products primarily under the Tyson, Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells, and State Fair brands, as well as Ball Park, Van's, Chef Pierre pies, Aidells, Gallo Salame, and Golden Island premium jerky brands. The company sells its products through its sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing companies, chain restaurants or their distributors, live markets, international export companies, and domestic distributors, as well as through independent brokers and trading companies. Tyson Foods, Inc. was founded in 1935 and is headquartered in Springdale, Arkansas.
​(Summary) (Company) (Chart)
12 January 2016
Price $53.58
1yr Target $55.09
Analysts 11
Dividend $0.60
Payout Ratio 20.33%

1yr Cap Gain 2.81%
Yield 1.11%

1yr Tot Return 3.92%

EPS (ttm) $2.95
EPS next yr $3.95
EPS next 5yr 12.36%
1yr Price Support $48.82
P/E 18.16
PEG 1.47
Beta 0.40
Market Cap $19.51 Bil
Revenues $41.37 Bil
Earnings $1.22 Bil

Profit Margin 2.94%
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1yr EarnGR 24.47%
3
yr EarnGR 22.88%
5yr EarnGR 7.44%
1yr DivGR 36.36%
3yr DivGR 32.45%
5yr DivGR 18.57%
Quick Ratio 0.70
Current Ratio 1.50
Debt/Equity 0.69
ROA 5.20%

ROE 12.90%
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​The Business 


Founded in 1935, Tyson Foods, Inc. is one of the world's largest food companies with leading brands such as Tyson, Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells and State Fair. The company is a recognized market leader in chicken, beef and pork as well as prepared foods, including bacon, breakfast sausage, turkey, lunchmeat, hot dogs, pizza crusts and toppings, tortillas and desserts. The company's operations are conducted in four reportable segments: Chicken, Beef, Pork and Prepared Foods. Some of the key factors influencing the business are their customer's demand for their products; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market prices for their products; the cost and availability of live cattle and hogs, raw materials, grain and feed ingredients; and operating efficiencies of our facilities.

Tyson Foods operates a fully vertically integrated chicken production process. The company's integrated operations consist of breeding stock, contract growers, feed production, processing, marketing and transportation of chicken and related allied products, including animal and pet food ingredients. Through a wholly owned subsidiary, Cobb-Vantress, Inc., Tyson Foods is one of the leading poultry breeding stock suppliers in the world. Investing in breeding stock research and development allows the company to breed into our flocks the characteristics found to be most desirable.

The company also processes live fed cattle and hogs and fabricates dressed beef and pork carcasses into primal and sub-primal meat cuts, case ready beef and pork and fully cooked meats. In addition, the company derives value from allied products such as hides and variety meats sold to further processors and others.

Tyson Foods produces a wide range of fresh, value-added, frozen and refrigerated food products. Their products are marketed and sold primarily by the company's sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing companies, chain restaurants or their distributors, live markets, international export companies and domestic distributors who serve restaurants, foodservice operations such as plant and school cafeterias, convenience stores, hospitals and other vendors. Additionally, sales to the military and a portion of sales to international markets are made through independent brokers and trading companies.

On August 28, 2014, Tyson Foods acquired and consolidated The Hillshire Brands Company, a manufacturer and marketer of branded, convenient foods. 

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​Four Segments

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Tyson Foods operates in four reportable segments: Chicken, Beef, Pork and Prepared Foods. 

Chicken: Chicken includes our domestic operations related to raising and processing live chickens into fresh, frozen and value-added chicken products, as well as sales from allied products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes logistics operations to move products through our domestic supply chain and the global operations of our chicken breeding stock subsidiary. 


Beef: Beef includes our operations related to processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal meat cuts and case-ready products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes sales from allied products such as hides and variety meats, as well as logistics operations to move products through the supply chain. 

Pork: Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes our live swine group, related allied product processing activities and logistics operations to move products through the supply chain. 

Prepared Foods: Prepared Foods includes our operations related to manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. On August 28, 2014, we completed the acquisition of Hillshire Brands, a manufacturer and marketer of branded, convenient foods which includes brands such as Jimmy Dean®, Ball Park®, Hillshire Farm®, State Fair®, Van's®, Sara Lee® and Chef Pierre® pies as well as artisanal brands Aidells®, Gallo Salame®, and Golden Island® premium jerky. Hillshire Brands' results from operations are reported in the Prepared Foods segment from the date of acquisition. Products primarily include pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, pizza crusts and toppings, flour and corn tortilla products, desserts, appetizers, prepared meals, ethnic foods, soups, sauces, side dishes, meat dishes, breadsticks and processed meats. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. 

​My Perspective


This is a company that literally feeds the world. And as long as the world keeps eating, this is going to be a great company. As an investor, I'm always looking for great companies. That said, I'd love to have this company in my portfolio and probably will one day. But today, the price is just too high for me. Just one month ago this stock was selling for approximately $44 per share. Today it's $54 per share. With a P/E of 18 and a one year estimated ROIC of only around 3%, I think the company has already made its move. 

But I like the company's fundamentals. Earnings growth and dividend growth are excellent but a estimated 5 yr earning growth of only about 12% simply doesn't support a P/E of 18. And that's evidence that the stock is currently overvalued. A month ago the P/E was closer to 14 which would have been an acceptable level to initiate a position. 

With an estimated eps of $3.95 I would begin to feel comfortable accumulating this stock at $48 and below. While still high based on actual earnings, it's not a stretch to see the P/E would be closer to 12, assuming the estimated earning are achieved (and that's not a certainty). 

I'll add Tyson Foods to my watch list with the intent to begin purchasing shares in this company as the P/E pulls back below 15 with a target P/E of 12. This is an excellent company that will be a great addition to my portfolio but only if I can get it at the right price.  

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0 Comments

Bunge

1/12/2016

0 Comments

 
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Bunge Limited (formerly Bunge International, and prior to that Bunge y Born) is a global agribusiness and food company, incorporated in Bermuda, and headquartered in White Plains, United States. As well as being an international soybean exporter, it is also involved in food processing, grain trading, and fertilizer. It competes with Cargill and Archer Daniels Midland. The company has over 35,000 employees at 400 facilities in 40 countries.

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​Bunge Limited
 operates as an agribusiness and food company worldwide. It operates in five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. The Agribusiness segment engages in the purchase, storage, transport, processing, and sale of agricultural commodities and commodity products, such as oilseeds and grains, including soybeans, rapeseed, canola, sunflower seeds, wheat, and corn to animal feed manufacturers, livestock producers, wheat and corn millers, other oilseed processors, third-party edible oil processing companies, and biodiesel industries. The Edible Oil Products segment provides packaged and bulk oils, shortenings, margarines, mayonnaise, sauces, pastes, condiments, seasonings, processed tomato products, and other products to baked goods companies, snack food producers, restaurant chains, foodservice distributors, and other food manufacturers, as well as grocery chains, wholesalers, distributors, and other retailers. The Milling Products segment produces and sells various wheat flours and bakery mixes; and corn milling products, including dry milled corn meals, flours, grits, soy-fortified corn meals, corn-soy blend products, and other products, as well as sells packaged rice products. The Sugar and Bioenergy segment produces and sells sugar and ethanol; trades and merchandises sugar; and generates electricity from burning sugarcane bagasse. As of December 31, 2014, this segment had a total installed capacity of approximately 314 megawatts. The Fertilizer segment produces, blends, and distributes nitrogen, phosphate, and potassium fertilizers comprising phosphate-based liquid and solid nitrogen fertilizers; single super phosphate; and ammonia, urea, ammonium thiosulfate, monoammonium phosphate, diammonium phosphate, triple super phosphate, UAN, ammonium sulfate, and potassium chloride products. Bunge Limited was founded in 1818 and is headquartered in White Plains, New York.
(Summary) (Company) (Chart)
11 January 2016
Price $66.45
1yr Target $84.95
Analysts 11
Dividend $1.52
Payout Ratio 50.66%

1yr Cap Gain 27.84%
Yield 2.28%

1yr Tot Return 30.12%

EPS (ttm) $3.00
EPS next yr $6.47
EPS next 5yr 17.04%
1yr Price Support $110.24
P/E 22.15
PEG 1.30
Beta 0.79
Market Cap $9.47 Bil
Revenues $45.58 Bil
Earnings $457.00 Mil

Profit Margin 1.00%
​
1yr EarnGR 104.51%
3
yr EarnGR -19.30%
5yr EarnGR 5.03%
1yr DivGR 12.82%
3yr DivGR 10.32%
5yr DivGR 16.69%
Quick Ratio 0.80
Current Ratio 1.40
Debt/Equity 0.73
ROA 2.50%

ROE 7.30%
​
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Operations

The company's operations include:
  • originating oilseeds and grains from the world's primary growing regions and transporting them to customers worldwide;
  • crushing oilseeds to make meal for the livestock industry and oil for the food processing, food service and biofuel industries;
  • producing bottled oils, mayonnaise, margarines and other food products for consumers;
  • crushing sugarcane to make sugar, ethanol and electricity;
  • milling wheat and corn for food processors, bakeries, brewers and other commercial customers; and
  • selling fertilizer to farmers.
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Abbreviated History


Bunge y Born was founded in 1818 by Johann Peter Gotlieb Bunge in Amsterdam, it was relocated to Antwerp by Edouard Bounge in 1859. Edouard's brother; Ernest Bunge, took the Bunge name to Argentina in 1884, and in 1905 the business extended to Brazil and later on to the USA. The company was converted into the Bermuda-registered Bunge International in 1994, retaining the Bunge y Born name only in Argentina. Bunge remained a privately held company of 180 shareholders (including the longtime controlling family interests) and divested itself in 1998 of almost all its retail foods interests in favor of a greater role in international agribusiness and commodity markets; by then the company's gross annual turnover had reached US$13 billion.  Bunge ultimately went public on the New York Stock Exchange in 2001, becoming Bunge Limited.

In 1994, the Bermuda-registered Bunge International was created as the main company in which the families had shares. There were around 180 shareholders—the main families were Hirsch, Bunge, Born, Engels, and De La Tour. This replaced the older structure in which individual shareholders had stakes in all the different Bunge companies. Now only in Argentina does the Bunge y Born name still exist.

In 2001, Bunge was listed on the New York Stock Exchange. Through their three businesses—agribusiness, fertilizer, and food products—they have established a leading global presence in the farm-to-consumer food chain. Bunge is the world's largest oilseed processor, the world's number one seller of bottled vegetable oil to consumers and the largest producer and supplier of fertilizers to farmers in South America.

In 2004, Bunge acquired Cereol, parent of oilseed companies Central Soya and CanAmera Foods.

In 2008, Bunge acquired Walter Rau, a margarine company, from Germany


​In 2009, Bunge acquired the margarine business from Raisio Group, maker of functional food ingredients.


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​My Perspective


Here's a company that's been around for almost 200 years but has been listed on the NYSE for only about 15 years. So there's a lot of history here but only a very short period of public history. But the private history implies that this is one of those companies that can weather any economic condition of almost any length. I expect this company isn't going anywhere and will be around another 200 years to benefit the general public as well as the original families. 

What attracted me to this company is the fifteen years of steadily increasing dividends. I'm a Dividend Growth Investor at heart and any company that continues to grow their dividend by at least 10% per year is very attractive to me. So today I started a position in this company. As with most of my investments, I'll start with a small position and increase that position over time by dividend reinvestment and by direct purchase. I then continue to add to that position as long as the stock performs as expected.

I'm not sure where I'm going with this investment but if it really does continue to increase its dividend annually at 10% or higher I expect this investment to eventually become a core holding that becomes larger and larger. 
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0 Comments

Prices and Yields

1/10/2016

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With the prices of stocks falling as much as they have this past week, an investor would expect dividend yields to be at all time highs. And in many cases that's exactly what's happened. But stocks don't fall simply for the benefit of Dividend Growth Investors. They often fall because either investors recognize that the fundamentals no longer support those lofty prices or that the fundamentals are beginning to deteriorate soon.

One way to see if an investor is paying too much for a stock is by looking at the stock's PEG. It's the multiple of the earnings growth rate and ideally you'd like to pay less than the growth rate, or a PEG <1. The other thing to look at is the payout ratio. Any company that's paying out more than 100% of earnings in dividends can't continue to do that for long because they're either shrinking the company or borrowing the money. And that's not good for the long term holder.

Below is a list of companies that many Dividend Growth Investors like to invest in and it shows the current yield, PEG and Payout Ratio. Hopefully this will give me a few ideas for further research and steer me away from some companies that really should be left for others to invest in. 

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Company
​3M Co.
Abbott Laboratories
AbbVie
AFLAC
Air Products & Chemicals
Archer Daniels Midland
AT&T
Automatic Data Processing
Becton, Dickinson
Bemis Company
Brown-Forman
Cardinal Health
Chevron
Cincinnati Financial
Cintas
Colgate-Palmolive
Consolidated Edison
CR Bard
Dover
Ecolab
Emerson Electric
Exxon Mobil
Franklin Resources
Genuine Parts
HCP
Hormel Foods
Illinois Tool Works
Johnson & Johnson
Kimberly-Clark
Leggett & Platt
Lowe's Companies
McCormick & Co
McDonald's
McGraw Hill Financial
Medtronic
Nucor
Pepsico
PPG Industries
Procter & Gamble
Stanley Black & Decker
Sysco 
T. Rowe Price Group
Target
The Chubb Corp
The Clorox Co
The Coca-Cola Co
The Sherwin-Williams Co
V.F. Corp
W.W. Grainger 
Walgreen
Wal-Mart
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Yield
​2.92%
2.56%
4.10%
2.89%
2.72%
3.26%
5.72%
2.71%
1.85%
2.53%
1.50%
1.85%
5.21%
3.31%
1.24%
2.43%
3.91%
0.53%
2.90%
1.34%
4.31%
​3.91%

2.14%
​3.13%
​6.21%
​1.48%
​2.62%
3.06%
2.81%
3.17%
1.58%
​2.06%
3.08%
​1.49%
2.06%
4.12%
​2.89%
1.52%
3.49%
2.28%
​3.12%
3.18%
3.14%
​1.77%
​2.44%
3.18%
1.11%
​2.54%
2.40%
1.78%
​3.08%


PEG
2.49
2.38
1.81
3.70
1.42
8.00
6.67
2.50
3.11
2.20
3.57
1.59
----
----
1.96
3.46
6.03
​10.08
3.06
2.26
1.81
----
----
​3.46
​22.30
1.71
​2.08
​3.51
10.68
1.60
1.31
​3.71
​3.03
​----
5.62
1.81
4.67
​1.86
2.99
1.56
​4.43
1.71
1.53
2.73
3.61
9.34
1.27
2.23
3.95
1.42
​11.36

Payout Ratio
49.90%
31.70%
113.40%
27.20%
53.80%
37.40%
126.40%
61.40%
69.20%
44.80%
38.40%
35.00%
92.40%
46.30%
37.10%
54.90%
68.80%
25.10%
28.80%
34.80%
46.70%
60.00%
14.30%
52.00%
430.80%
38.50%
39.30%
54.80%
212.20%

66.10%
​32.10%
50.30%
73.10%
995.50%
70.60%
75.60%
79.90%
32.20%
96.00%
41.30%
109.10%
​42.30%
----
25.30%
59.40%
​82.00%
24.10%
52.50%
30.50%
33.70%
41.70%


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Remember Why You Bought It

1/8/2016

0 Comments

 
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Don't Panic. 

This is probably the worst thing any investor could do when faced with what's going on in the market these days. No doubt it's painful for most investors but to panic and do something rash is the wrong thing to do.

Remember all those reasons you bought shares of those companies in the first place. If those reasons escape your memory, look back on your notes (smart investors do that). I like to buy the stock of companies that increase their revenues, earnings and dividends over an extended period of years. So when my stocks get taken down, as many of them have lately, I simply recheck those fundamentals that got me into the stocks. If the fundamentals of the companies I own are still intact, I simply relax. Take a nap. Or buy even more. 


I have to keep in mind that I'm buying companies with solid fundamentals and great management teams. Those companies always find a way to increase their revenues and earnings and understand the importance of maintaining and increasing the company's dividend. Most of these management teams have been through difficult times before and they have been successful in managing these difficult environment and even benefiting from any economic shifts. And then they usually increase their dividend as they've done before.

I expect that most of what's going on this week is simply the realization by investors and traders that the Chinese government has been pumping out fake economic data for years in an attempt to control their financial markets. As the truth starts to come to light the Chinese are beginning to find out that they can't control capitalism like they control their political system. This incompetency is causing second and third order affects in the world markets but in the end those markets may undermine the political system in China. 

In the future some of our best Business Schools and some of our best MBA students will be studying these events for any lessons to be gained. Maybe the Political Science and History Departments should be studying these events too.

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Big Lots

1/7/2016

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Big Lots is expected to have a great fourth quarter and this may be the trend that takes the company's stock higher. With earnings expected to increase 20+% for the current year (ending January 2016) and another 12+% next year, the stock of this company may just be in a position to move higher. It's increased earnings that drive stock prices and dividends higher and Big Lots earnings are increasing going forward.

A quick look at the company's stock chart and an investor gets the sense of where the support and resistance points are (see below). In early May, 2014, the stock hit minor resistance near $38 before moving higher. After a six month move higher the stock hit resistance once again near $50 per share. Throughout 2015 the stock hit resistance at $50 two more times while also finding support at $38 per share.

Today the P/E ratio is a respectable 14.43 which is line with its forward estimated earnings growth resulting in a PEG of 0.96. With an estimated increase in earnings to $3.30 next year (January 2017), I could easily see the stock in this company increasing to $50 per share once again sometime in 2016. An investment in Big Lots falls into the category of a very nice swing trade. This would produce an approximate return on investment of 30%. 

For me an investment in Big Lots falls into that category of a very nice swing trade. It's the kind of trade I simply can't pass up. And with any luck, I'll be able to repeat this trade more than once. 
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​Big Lots, Inc.
 operates as a non-traditional, discount retailer. The company offers products under various merchandising categories, such as food category that includes beverage and grocery, candy and snacks, and specialty foods departments; consumables category, which comprises health and beauty, plastics, paper, chemical, and pet departments; soft home category that consists of fashion bedding, utility bedding, bath, window, decorative textile, and area rugs departments; hard home category, including small appliances, table top, food preparation, stationery, greeting cards, tools, paint, and home maintenance departments; and furniture and home décor category consisting of upholstery, mattress, ready-to-assemble, case goods, home décor, and frames departments. It also provides merchandise under the seasonal category that includes lawn and garden, summer, Christmas, toys, books, sporting goods, and other holiday departments; and electronics and accessories category, including electronics, jewelry, apparel, hosiery, and infant accessories departments. As of March 6, 2015, it operated 1,461 stores in 48 states. Big Lots, Inc. was founded in 1967 and is headquartered in Columbus, Ohio
(Summary) (Company) (Chart)

3 January 2016
Price $38.54
1yr Target $50.36
Analysts 14
Dividend $0.76
Payout Ratio 28.46%

1yr Cap Gain 30.66%
Yield 1.97%

1yr Tot Return 32.63%
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EPS (ttm) $2.67
EPS next yr $3.30
EPS next 5yr 14.97%
1yr Price Support $49.40
P/E 14.43
PEG 0.96
Beta 0.68
Market Cap $1.91 Bil
Revenues $5.20 Bil
Earnings $142.30 Mil

Profit Margin 2.73%
​
1yr EarnGR -4.63%
3
yr EarnGR -11.48%
5yr EarnGR -3.17%
1yr DivGR 11.76%
3yr DivGR ---
5yr DivGR ---
Quick Ratio 0.30
Current Ratio 1.70
Debt/Equity 0.53
ROA 8.30%

ROE 19.90%
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The Company's History

The Big Lots chain traces its history back to 1967 when Consolidated Stores Corporation was formed in Ohio. But it wasn't until 1982 that Consolidated Stores Corp. opened its first closeout store named Odd Lots, in Columbus, Ohio.

In 1983, the drug store chain Revco bought a New Jersey closeout retailer named the Odd Lot Trading Co. As Consolidated's Odd Lots stores expanded from Columbus, Ohio, toward New Jersey, Revco took issue with the fact that another closeout retailer was operating a chain with national aspirations that had a similar name as the Revco-owned subsidiary.

Consolidated Stores Corp. agreed to limit their use of the Odd Lots name to stores located within a certain radius of Columbus. But beyond that radius, Consolidated began opening stores under the Big Lots name. Eventually, all of Consolidated's Odd Lots stores were rebranded as Big Lots.

In 1985, Consolidated Stores Corp. began trading as a separate public company on the American Stock Exchange. With continued expansion, Consolidated Stores Corp., in 1986, switched to the New York Stock Exchange trading under the symbol CNS.


In 1994, Consolidated Stores Corp. acquired Toy Liquidators, adding 82 stores in 38 states. Looking to expand further into the toys business, Consolidated Stores Corp. purchased KB Toys from Melville Corporation in 1996. In 2000, Consolidated Stores Corp. sold the KB Toys and Toy Liquidators lines to private equity shops. A year later, the company decided to focus on the Big Lots brand, and on May 16, 2001, Consolidated Stores Corp. changed its name to Big Lots, Inc. and its ticker symbol from CNS to BLI. By the end of 2002, Big Lots Inc. completed a nationwide conversion to the single Big Lots brand.

In 2002, Big Lots Inc. bought out 'MacFrugals' (Pic 'N' Save) stores for $995 million in stock and converted those to the Big Lots brand. On November 19, 2010, Big Lots opened 17 new stores bringing its total to over 1400 stores. More recently, Big Lots has expanded its foot print by opening hundreds of additional new stores.


In the later part of 2005, Big Lots closed 170 stores, including all free-standing Big Lots Furniture specialty stores. Most Big Lots stores have furniture departments which sell upholstered furniture (sofas, love seats, and recliners), Serta mattresses, fully assembled and ready to assemble furniture. Some, primarily smaller, stores only carry a limited assortment of mattresses and ready to assemble furniture.


On August 3, 2006, Big Lots announced it would change its New York Stock Exchange ticker symbol from BLI to BIG, beginning with trading activity on August 18, 2006.

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Kforce

1/5/2016

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Kforce Inc. is a professional staffing services firm whose purpose is to provide expertise to other companies on a short or long term basis. Their name stands for KnowledgeForce and it aptly describes their highly skilled professionals, the knowledge gained from over 50 years of experience, and the power of their team to provide the exact professional needed. The company provides flexible and direct hire staffing professionals in both Technology and Finance and Accounting, engaging over 23,000 highly skilled professionals with more than 4,000 customers.
​

The company's national network of sixty offices, two national recruiting centers, and over two thousand staffing specialists supports their ability to meet the needs of their customers, including 70% of the Fortune 100. Their client centric Knowledge Staffing Model allows for on-demand identification and delivery of top talent through progressive recruiting strategies and advanced technologies.
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​Kforce Inc.
 provides professional and technical specialty staffing services and solutions in the United States and internationally. The company operates through Technology (Tech), Finance and Accounting (FA), and Government Solutions (GS) segments. The Tech segment offers temporary staffing and permanent placement services primarily in the areas of information technology, such as systems/applications programmers and developers, senior-level project managers, systems analysts, enterprise data management, and e-business and networking technicians. This segment serves clients in various industries, primarily in healthcare, financial services, and government sectors. The FA segment provides temporary staffing and permanent placement services in the areas of general accounting, business analysis, accounts payable, accounts receivable, financial analysis and reporting, taxation, budget preparation and analysis, mortgage and loan processing, cost analysis professional administrative, credit and collections, audit services, and systems and controls analysis and documentation. This segment serves clients in various industries, primarily healthcare, financial services, and government sectors. The GS segment offers Tech and FA professionals to the Federal Government; and integrated business solutions in the areas of information technology, healthcare informatics, data and knowledge management, research and development, financial management and accounting, and others. Kforce Inc. was founded in 1962 and is headquartered in Tampa, Florida.
​(Summary) (Company) (Chart)
​
3 January 2016
Price $25.28
1yr Target $30.43
Analysts 7
Dividend $0.48
Payout Ratio 34.28%

1yr Cap Gain 20.37%
Yield 1.89%

1yr Tot Return 22.26%
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EPS (ttm) $1.40
EPS next yr $1.78
EPS next 5yr 30.17%
1yr Price Support $53.70
P/E 18.06
PEG 0.60
Beta 1.41
Market Cap $731.10 Mil
Revenues $1.31 Bil
Earnings $40.00 Mil

Profit Margin 3.05%
​

1yr EarnGR 796.87%
3
yr EarnGR 59.30%
5yr EarnGR 54.12%
1yr DivGR 320.00%
3yr DivGR ---
5yr DivGR ---
Quick Ratio 2.10
Current Ratio 2.10
Debt/Equity 0.57
ROA 10.90%

ROE 28.70%
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Company Overview

Kfroce is a provider of professional and technical specialty staffing services and solutions. Its corporate headquarters is located in Tampa, Fla., and it has 62 field offices located throughout the US and 1 office in Manila, Philippines. The company was incorporated in 1994 but its predecessor companies, Romac & Associates, Inc. and Source Services Corporation have been providing staffing services since 1962. Subsequent to its incorporation, Kforce completed its Initial Public Offering in August 1995. As of February 24, 2015, there were approximately 175 holders of record. 

The company provides its clients with staffing services and solutions through three operating segments: Technology (“Tech”), Finance and Accounting (“FA”) and Government Solutions (“GS”). The Tech segment includes the results of Kforce Global Solutions, Inc. (“Global”), a wholly-owned subsidiary, which has an office in the Philippines. The GS segment is organized and managed by specialty because of the unique operating characteristics of the business. 

Tech

Our Tech segment provides both temporary staffing and permanent placement services to our clients, focusing primarily on areas of information technology such as systems/applications programmers and developers, senior-level project managers, systems analysts, enterprise data management and e-business and networking technicians. The average bill rate for our Tech segment for 2014 was approximately $68 per hour. Our Tech segment provides service to clients in a variety of industries with a strong footprint in the healthcare, financial services and government sectors. An IT growth update published by Staffing Industry Analysts (“SIA”) during September 2014, states that temporary technology staffing is projected to experience growth of 7% in 2015. We believe the sustained high growth is due to the continuing use of temporary staffing as a solution during uncertain economic cycles, the increasing cost of employment driving the systemic use of temporary staffing, particularly in project-based work such as technology, and an increasing influence of technology in business driving the overall demand for talent in the temporary technology staffing sector. The SIA report also acknowledges that notable skill shortages in certain technology skill sets will continue, which we believe will result in strong future growth in our Tech segment. 


FA

Our FA segment provides both temporary staffing and permanent placement services to our clients in areas such as general accounting, business analysis, accounts payable, accounts receivable, financial analysis and reporting, taxation, budget preparation and analysis, mortgage and loan processing, cost analysis, professional administration, credit and collections, audit services, and systems and controls analysis and documentation. Our FA segment provides service to clients in a variety of industries with a strong footprint in the healthcare, financial services and government sectors. The average bill rate for our FA segment for 2014 was approximately $32 per hour. In its September 2014 update, the SIA report indicated that the market for temporary finance/accounting work is expected to expand 5% during 2015.


GS

​Our GS segment provides Tech and FA professionals to the Federal Government as both a prime contractor and a subcontractor. The GS contracts are concentrated on customers that we believe are less impacted by sequestration threats, such as healthcare. GS offers integrated business solutions to its customers in areas such as: information technology, healthcare informatics, data and knowledge management, research and development, financial management and accounting, among other areas. Substantially all GS services are supplied to the Federal Government through field offices located in the Washington, D.C. metropolitan area, San Antonio, Texas and Austin, Texas. 


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​Types of Staffing Services


Kforce’s staffing services consist of temporary staffing services (“Flex”) and permanent placement services (“Search”). For the three years ended December 31, 2014, 2013, and 2012, Flex represented 96.2%, 95.5% and 95.3% of total Kforce revenue, respectively.


We target clients and recruits for both Flex and Search services, which contributes to our objective of providing integrated solutions for all of our clients’ human capital needs

Flex


We provide our clients with qualified individuals (“consultants”) on a temporary basis when it is determined that they have the appropriate skills and experience and are “the right match” for our clients. We recruit consultants from the job boards, Kforce.com, from social media networks and from passive candidates we identify who are currently employed and not actively seeking another position. Our success is dependent upon our employees’ (“associates”) ability to: (1) understand and acknowledge our clients’ needs; (2) determine and understand the capabilities of the consultants being recruited; and (3) deliver and manage the client- consultant relationship to the satisfaction of both our clients and our consultants. We believe proper execution by our associates and our consultants directly impacts the longevity of the assignments, increases the likelihood of being able to generate repeat business with our clients and fosters a better experience for our consultants, which has a direct correlation to their redeployment.


Flex revenue is driven by the number of total hours billed and established bill rates. Flex gross profit is determined by deducting consultant pay, benefits and other related costs from Flex revenues. Flex associate commissions, related taxes and other compensation and benefits, as well as field management compensation are included in selling, general and administrative expenses (“SG&A”), along with administrative and corporate compensation. The Flex business model involves attempting to maximize the number of consultant hours and bill rates, while managing consultant pay rates and benefit costs, as well as compensation and benefits for our core associates. Flex revenue also includes solutions provided through our GS segment. These revenues involve providing longer-term contract services to the customer primarily on a time-and-materials basis but also on a fixed-price and cost-plus basis.


Search

Our Search business is a significantly smaller, yet important, part of our business that involves locating qualified individuals (“candidates”) for permanent placement with our clients. We primarily perform these searches on a contingency basis; thus, fees are only earned if the candidates are ultimately hired by our clients. The typical structure for search fees is based upon a percentage of the placed individual’s annual compensation in their first year of employment, which is known at the time of placement. We recruit permanent employees from the job boards, from our associates’ networks, social media networks and from passive candidates we identify who are currently employed and not actively seeking another position. Also, there are occasions where consultants are initially assigned to a client on a Flex basis and later are converted to a permanent placement, for which we may also receive a Search fee (referred to as “conversion revenue”).


​Search revenues are driven by placements made and the resulting fees billed and are recognized net of an allowance for “fallouts,” which occur when placements do not complete the applicable contingency period. Although the contingency period varies by contract, it is typically 90 days or less. This allowance for fallouts is estimated based upon historical experience with Search placements that did not complete the contingency period. There are no consultant payroll costs associated with Search placements, thus, all Search revenues increase gross profit by the full amount of the fee. Search associate commissions, compensation and benefits are included in SG&A. 


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​My Perspective


​I like staffing companies because they fill a need that exists in the business world. As economies improve, companies often need to increase staffing and companies like Kforce make that possible. Assuming they can continue to find skilled professionals, their business should continue to improve as the economy improves.

With a 30% projected earnings increase over the next 5 years, a P/E below 20, and a PEG of .60, this is a company with nice fundamentals. Looking at the weekly chart above, it's obvious that the stock has been moving up in stair steps over the last couple of years. During the first half of 2015 the stock found resistance near $24 but in August it broke out and moved higher. After finding resistance near $28 it has pulled back to prior resistance and found support near $24. It's currently above $25 and probably should have been bought 2 weeks ago, but I expect a smart investor can use this chart to his advantage.

I believe this stock has the potential to increase in value at nearly 30% per year, along with earnings. I also believe its dividend will probably increase similarly over that same time. These are the kinds of numbers that can make an investor wealthy over time.   
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0 Comments

Growth and Income Country Style

1/3/2016

0 Comments

 
Three companies have found both growth and income in some of the most rural parts of this country. They found growth by simply looking around and seeing the vast amounts of farmland that increases an average of 6% per year. They found income in the payments that farmers would make to landowners to lease that farmland during the growing season. These two things together have made a lot of landowners very wealthy over the years. And now these three companies are making that growth and income available to anyone. 

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​Gladstone Land Corporation
, an externally-managed agricultural real estate investment trust, owns and leases farmland to corporate and independent farmers in the United States. The company’s farms allow its tenants to grow row crops, such as lettuce and tomatoes; and berries comprising strawberries and raspberries. As of December 28, 2015, it owned 43 farms covering an area of 16,810 acres located in 6 states across the United States. The company also leases a parcel on its farm near Oxnard, California to an oil company. Gladstone Land Corporation was founded in 1997 and is based in McLean, Virginia.
(Summary) (Company) (Chart)
3 January 2016
Price $8.65
1yr Target $12.80
Analysts 5
Dividend $0.48
Payout Ratio 1600%

1yr Cap Gain 47.97%
Yield 5.54%

1yr Tot Return 53.51%
​
EPS (ttm) $0.03
EPS next yr $0.13
EPS next 5yr 10.00%
1yr Price Support $1.30
P/E 288.33
PEG 28.83
Beta ---
Market Cap $86.50 Mil
Revenues $10.80 Mil
Earnings $0.30 Mil

Profit Margin 2.77%
​
1yr EarnGR ---
3
yr EarnGR ---
5yr EarnGR ---
1yr DivGR 200.00%
3yr DivGR ---
5yr DivGR ---
Quick Ratio ---
Current Ratio ---
Debt/Equity 1.97
ROA 0.20%

ROE 0.50%
​
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Farmland Partners Inc., a real estate company, owns and seeks to acquire primary crop farmland located in agricultural markets throughout North America. As of November 30, 2015, it owned 253 farms with an aggregate of 104,742 acres located in Arkansas, Colorado, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, and Virginia. The company was founded in 2013 and is based in Westminster, Colorado.
(Summary) (Company) (Chart)
3 January 2016
Price $10.97
1yr Target $12.58
Analysts 6
Dividend $0.51
Payout Ratio %

1yr Cap Gain 14.67%
Yield 4.64%

1yr Tot Return 19.31%
​
EPS (ttm) $-0.02
EPS next yr $0.27
EPS next 5yr ---
1yr Price Support $---
P/E ---
PEG ---
Beta ---
Market Cap $131.42 Mil
Revenues $10.60 Mil
Earnings $0.00 Mil

Profit Margin 0.00%
​
1yr EarnGR ---
3
yr EarnGR ---
5yr EarnGR ---
1yr DivGR ---
3yr DivGR ---
5yr DivGR ---
Quick Ratio ---
Current Ratio ---
Debt/Equity 1.74
ROA 0.00%

ROE -0.10%
​
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American Farmland Company, a real estate company, owns and operates a portfolio of farmlands in the United States. The company operates through four segments: Permanent Crop, Specialty/Vegetable Row Crop, Commodity Row Crop, and Development. The Permanent Crop segment consists of Kimberly Vineyard, Golden Eagle Ranch, Quail Run Vineyard, Blue Heron Farms, and Falcon Farms properties with an aggregate of 3,069 tillable acres and 3,882 gross acres. The Specialty/Vegetable Row Crop segment includes Sandpiper Ranch and Sweetwater Farm properties with an aggregate of 1,608 tillable acres and 1,808 gross acres. The Commodity Row Crop segment comprises Pleasant Plains, Macomb Farm, Kane County Farms, and Tillar Farms with an aggregate of 4,446 tillable acres and 4,726 gross acres. The Development segment consists of Blue Cypress Farm, Roadrunner Ranch, Condor Ranch, Grassy Island Groves, Pintail Vineyards, and Hawk Creek Ranch properties, with an aggregate of 3,487 tillable acres and 4,962 gross acres. The company leases its farms to professional farmer tenants under various lease structures with staggered durations, including fixed and participating leases. The trust qualifies as a real estate investment trust for federal income tax purposes. American Farmland Company was founded in 2009 and is based in New York, New York.
(Summary) (Company) (Chart)
3 January 2016
Price $7.04
1yr Target $9.50
Analysts 7
Dividend $0.25
Payout Ratio 500%

1yr Cap Gain 34.94%
Yield 3.55%

1yr Tot Return 38.49%
​
EPS (ttm) $0.05
EPS next yr $0.27
EPS next 5yr N/A
1yr Price Support N/A
P/E 140.80
PEG ---
Beta ---
Market Cap $141.93 Mil
Revenues $9.40 Mil
Earnings $0.60 Mil

Profit Margin 6.38%
​
1yr EarnGR ---
3
yr EarnGR ---
5yr EarnGR ---
1yr DivGR ---
3yr DivGR ---
5yr DivGR ---
Quick Ratio ---
Current Ratio ---
Debt/Equity 0.51
ROA 0.40%

ROE 0.70%
​
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My Perspective

I own stock in each of these three companies and continue to add to those positions as often as I can through the use of dividend reinvestment, option selling, and direct purchases in the open market. I believe these companies are great companies and obvious investments if bought at beneficial prices.

The central idea behind the American Farmland Company was to accumulate and then to lease farmland. The founders noted that U.S. farmland property values generally increase over the long term while having lower than historical debt to equity and debt to asset ratios. They have also risen during both increasing and decreasing interest rate environments. This historical perspective is expected to increase in the future as well.

With less debt, farmland has been and may be more resistant to interest rate changes, credit shocks and financial recessions. And more specifically and timely, during the financial crisis of 2008, the NCREIF Farmland Index generated robust gross cumulative gains while the S&P 500 Index and the MSCI World Index generated substantial losses.

As a result, I am completely convinced that any investment in these companies is a great investment but it has to be entered into as a long term investment. And by long term I mean years, not months. Anyone with a shorter term horizon will most likely become disillusioned and/or disappointed in the short term. That said, this may just be one of the best investments of the decade if executed correctly (a big if!). Land traditionally increases in value at a rate similar to the inflation rate so it's a great preserver of purchasing power over time, much like gold is. In addition, as population encroaches on today's farm land, the value of the land increases almost exponentially as its use in converted into lots for homes, businesses, golf courses, etc. And while an investor waits for the value of the land (stock) to increase, each of these companies is throwing off a very generous dividend.
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    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.


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