Investing - dennis mccain

Lions Gate Entertainment

8/28/2015

It's no secret that I'm a strong believer in digital content. I own shares in Disney, Comcast, Time Warner, Fox, and Viacom because I believe that entertainment is going to attract a bigger and bigger share of the world's disposable income. And regardless of the means by which people get their entertainment, it's the content they're after. It's those companies that create entertainment that will be the winners in the future and provide wealth for their investors. Lions Gate Entertainment is just one of those digital content creators producing entertainment for the big screen, the small screen, and the internet age, but it's becoming more and more important with time.

Lions Gate Entertainment Corp. engages in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, channel platforms, and international distribution and sales activities. The company operates through two segments, Motion Pictures and Television Production. The Motion Pictures segment is involved in the development and production of feature films; acquisition of North American and worldwide distribution rights; North American theatrical, home entertainment, and television distribution of feature films produced and acquired; and worldwide licensing of distribution rights to feature films produced and acquired. The Television Production segment engages in the development, production, and worldwide distribution of television productions, including television series, television movies and mini-series, and non-fiction programming. The company distributes a library of approximately 16,000 motion picture titles, television episodes, and programs directly to retail stores and through digital media platforms, as well as indirectly to other international markets through third parties. It also produces, syndicates, and distributes 30 television shows, which air on 20 networks. Lions Gate Entertainment Corp. was founded in 1986 and is headquartered in Santa Monica, California.
(Summary) (Company) (Daily Chart)

27 August 2015
Price $37.41
1yr Target $41.85
Analysts 13
Dividend $0.28
Payout Ratio %
1yr Cap Gain 11.86%
Yield 0.74%
1yr Tot Return 12.60%

Market Cap $5.55 Bil
1yr EarnGR 18.26%
3yr EarnGR ---
5yr EarnGR ---
1yr DivGR 33.33%
3yr DivGR ---
5yr DivGR ---
Revenues $2.36 Bil
Earnings $179.20 Mil
Profit Margin 7.58%

Beta 0.69
EPS (ttm) $1.18
EPS next yr $1.99
EPS next 5yr 25.00%
P/E 31.70
PEG 1.27
Debt/Equity 1.52
ROA 5.50%
ROE 23.70%
ROI 8.30%

Horace Mann Educators

8/26/2015

Horace Mann Educators Corporation is an outstanding insurance company with a very special focus. And that focus is teachers. In fact, this company was founded by teachers who understood that teachers were an underserved group with very specific needs. And that has turned out to be a very lucrative business for the company's shareholders. In 2014 Horace Mann Educators has once again delivered a year of strong performance with double digit sales growth and near record operating earnings per share.

Horace Mann Educators Corporation operates as a multiline insurance company in the United States. It underwrites and markets personal lines of property and casualty insurance, including personal lines automobile and homeowners insurance products; retirement annuities comprising tax-qualified fixed and variable deposits; and life insurance. The company markets its products through its sales force of full-time agents and independent agents to K-12 teachers, administrators, and other employees of public schools and their families. Horace Mann Educators Corporation was founded in 1945 and is headquartered in Springfield, Illinois.
(Summary) (Company) (Daily Chart)

23 August 2015
Price $32.64
1yr Target $36.50
Analysts 2
Dividend $1.00
Payout Ratio 39.84%
1yr Cap Gain 11.82%
Yield 3.06%
1yr Tot Return 14.88%

Market Cap $1.34 Bil
1yr EarnGR -7.15%
3yr EarnGR 13.12%
5yr EarnGR 6.41%
1yr DivGR 8.69%
3yr DivGR 21.80%
5yr DivGR 23.36%
Revenues $1.06 Bil
Earnings $105.90 Mil
Profit Margin 9.90%

Beta 1.46
EPS (ttm) $2.51
EPS next yr $2.59
EPS next 5yr 12.67%
P/E 13.00
PEG 1.03
Debt/Equity 0.18
ROA 1.60%
ROE 11.60%
ROI 7.50%

History

The Company was founded in Springfield, Illinois in 1945 by two school teachers with the purpose of selling automobile insurance to other teachers solely within the State of Illinois. In 1949, the company expanded its core business to other states and then broadened its product line to include life insurance. In 1961 the company added 403(b) tax qualified retirement annuities, and then in 1965 added homeowners insurance. In November 1991 Horace Mann Educators Corporation completed its initial public offering of common stock and is currently traded on the New York Stock Exchange under the symbol “HMN”.

Overview and Organizational Structure

Horace Mann Educators Corporation is an insurance holding company that markets and underwrites personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance in the United States. The company's principal insurance subsidiaries are Horace Mann Life Insurance Company (“HMLIC”), Horace Mann Insurance Company (“HMIC”), Horace Mann Property & Casualty Insurance Company (“HMPCIC”) and Teachers Insurance Company (“TIC”), each of which is an Illinois corporation, and Horace Mann Lloyds (“HM Lloyds”), an insurance company domiciled in Texas.

Founded by Educators for Educators®, the Company markets its products primarily to K-12 teachers, administrators and other employees of public schools and their families. The Company's nearly one million customers typically have moderate annual incomes, with many belonging to two income households. Their financial planning tends to focus on retirement, security, savings and primary insurance needs. Horace Mann is the largest national multiline insurance company focused on the nation's educators as its primary market.

Horace Mann markets and services its products primarily through a dedicated sales force of full-time agents supported by the Company’s Customer Contact Center. These agents sell Horace Mann's products and limited additional third-party vendor products. Some of these agents are former educators or individuals with close ties to the educational community who utilize their contacts within, and knowledge of, the target market. This dedicated agent sales force is supplemented by an independent agent distribution channel for the Company’s annuity products.

The Company's insurance premiums written and contract deposits for the year ended December 31, 2014 were $1.2 billion and net income was $104.2 million. The Company's total assets were $9.8 billion at December 31, 2014. The Company's investment portfolio had an aggregate fair value of $7.4 billion at December 31, 2014 and consisted principally of investment grade, publicly traded fixed maturity securities.

The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, annuity products, and life insurance. The Company does not allocate the impact of corporate level transactions to the insurance segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, corporate and other. The property and casualty, annuity, and life segments accounted for 50%, 41% and 9%, respectively, of the Company's insurance premiums written and contract deposits for the year ended December 31, 2014.

The Company is one of the largest participants in the K-12 portion of the 403(b) tax-qualified annuity market, measured by 403(b) net written premium on a statutory accounting basis. The Company's 403(b) tax-qualified annuities are voluntarily purchased by individuals employed by public school systems or other tax-exempt organizations through the employee benefit plans of those entities. The Company has 403(b) payroll deduction capabilities utilized by approximately one-third of the 13,600 public school districts in the U.S.

My Perspective

This investment looks like a no brainer. While earnings for any insurance company can be highly dependent on premiums and payouts as well as the company's ability to invest any excess income, Horace Mann Educators has had a fairly consistent increase in earnings over the years. They've also increased their dividend during each of the last seven years (which dividend growth investors love to hear).

The demographics also just work extremely well for this company. As the population of school age individuals increases exponentially in the future the number of teachers will also increase. And each one of those teachers will have a need for the products that this company sells. As a result I expect this company to increase their earnings and dividends in the low double digits for many years to come.

I intend to begin accumulating shares of this company in the next few weeks. As usual, I will start out with a small position and allow that position to grow over time through additional investments as well as dividend reinvestment. I generally allow this to occur until I accumulate a relatively significant position and then I stop buying additional shares and allow the dividends to simply be deposited into my accounts. At that point, those dividends are used to establish a position in another company thus diversifying my portfolio.

Vail Resorts

8/24/2015

Vail Resort is a major participant in the upper end vacation segment of the travel industry. Among its peers it is in the enviable position of being both a quality and a volume leader in the industry. Four of its mountain resorts are among the top five most visited resorts anywhere in the United States. In addition, the company's resorts serve a customer base with an above average income of $170,000 per year across all five of their resorts.

Vail Resorts, Inc. operates mountain resorts and urban ski areas in the United States. The company operates in three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates eight mountain resort properties, including the Vail, Breckenridge, Keystone, and Beaver Creek mountain resorts in Colorado; the Heavenly, Northstar, and Kirkwood mountain resorts in the Lake Tahoe area, California and Nevada; and the Canyons mountain resort in Park City, Utah, as well as two urban ski areas, such as Afton Alps and Mount Brighton Ski areas. Its resorts offer various winter and summer recreational activities, including skiing, snowboarding, snowshoeing, snowtubing, sightseeing, mountain biking, guided hiking, children's activities, and other recreational activities; and ski and snowboard lessons, equipment rental and retail merchandise services, dining venues, private club services, and other winter and summer recreational activities. This segment also leases its owned and leased commercial space; and provides real estate brokerage services. The Lodging segment owns and/or manages various luxury hotels under the RockResorts brand, and other lodging properties; various condominiums located in and around the company’s mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates approximately 4,900 owned and managed hotel and condominium rooms. The Real Estate segment owns, develops, markets, and sells real estate properties in and around the company’s resort communities. Vail Resorts, Inc. was founded in 1997 and is based in Broomfield, Colorado.
(Summary) (Company) (Daily Chart)

23 August 2015
Price $108.42
1yr Target $118.38
Analysts 8
Dividend $2.49
Payout Ratio 86.15%
1yr Cap Gain 9.18%
Yield 2.29%
1yr Tot Return 11.47%

Market Cap $3.94 Bil
1yr EarnGR 302.59%
3yr EarnGR 89.05%
5yr EarnGR 30.15%
1yr DivGR 51.09%
3yr DivGR 48.58%
5yr DivGR ---
Revenues $1.37 Bil
Earnings $109.50 Mil
Profit Margin 7.95%

Beta 0.97
EPS (ttm) $2.89
EPS next yr $3.41
EPS next 5yr 42.10%
P/E 37.52
PEG 0.89
Debt/Equity 0.66
ROA 4.70%
ROE 13.00%
ROI 7.00%

Corporate Structure

Vail Resorts, Inc. operates in three business segments: Mountain, Lodging and Real Estate, which represented approximately 77%, 19% and 4% of their net revenue. The Mountain segment operates eight world-class mountain resort properties and two urban ski areas as well as ancillary services including ski school, dining and retail/rental operations. The Lodging segment owns and/or manages luxury hotels under the RockResorts brand, as well as other strategic lodging properties and a large number of condominiums located in proximity to their mountain resorts, certain National Park Service concessionaire properties including Grand Teton Lodge Company which operates destination resorts at Grand Teton National Park; Colorado Mountain Express, a Colorado resort ground transportation company; and mountain resort golf courses. Together the Mountain and Lodging segments are considered as simply as the Resort segment. The Real Estate segment owns and develops real estate in and around the resort communities.

The Mountain Segment

The following are the company's world-class mountain resorts and urban ski areas:

Vail Mountain (“Vail Mountain”) - the single most visited mountain resort in the United States for the 2013/2014 ski season. Vail Mountain offers some of the most expansive and varied terrain in North America with approximately 5,300 skiable acres including seven world renowned back bowls and the resort’s rustic Blue Sky Basin.
Breckenridge Ski Resort (“Breckenridge”) - the second most visited mountain resort in the United States for the 2013/2014 ski season with five interconnected peaks offering an expansive variety of terrain for every skill level, including the recent addition of Peak 6 which provides access to above tree line intermediate and expert terrain, and progressive and award-winning terrain parks. The Town of Breckenridge is well known for its historic town and vibrant nightlife.

Keystone Resort (“Keystone”) - the third most visited mountain resort in the United States for the 2013/2014 ski season and home to the highly renowned A51 Terrain Park as well as the largest area of night skiing in Colorado. Keystone also offers guests a unique skiing opportunity through guided snow cat ski tours accessing five bowls. Keystone is a premier destination for families with its “Kidtopia” program focused on providing activities for kids on and off the mountain.
Beaver Creek Resort (“Beaver Creek”) - the sixth most visited mountain resort in the United States for the 2013/2014 ski season. Beaver Creek is a European-style resort with multiple villages and also includes a world renowned children’s ski school program focused on providing a first-class experience with unique amenities such as a dedicated children’s gondola. Beaver Creek also annually hosts the only North American men’s World Cup downhill races, and with Vail Mountain will host the 2015 FIS World Alpine Ski Championships.
Heavenly Mountain Resort (“Heavenly”) - located near the South Shore of Lake Tahoe with over 4,800 skiable acres, straddling the border of California and Nevada, offers unique and spectacular views of Lake Tahoe and boasts the largest snowmaking capacity in the Lake Tahoe region. Heavenly offers great nightlife including its proximity to several casinos.
Northstar Resort (“Northstar”) - the premier luxury mountain resort destination near Lake Tahoe and offers premium lodging, a vibrant base area and over 3,000 skiable acres. Northstar’s village features high-end shops and restaurants, a conference center and a 9,000 square-foot skating rink.
Canyons Resort (“Canyons”) - the largest mountain resort in Utah offering over 4,000 skiable acres and features a modern base area located less than 35 miles from the Salt Lake City International Airport and adjacent to the historic downtown of Park City with all of its distinctive restaurants and nightlife. The resort offers guests an outstanding ski experience with fine dining, ski school, retail and lodging.
Park City Mountain Resort (“PCMR”) - acquired on September 11, 2014, PCMR is located in the heart of historic Park City, Utah, one the country’s great ski destinations. PCMR offers terrain for every type of skier and snowboarder on over 3,300 acres including manicured groomers, bowls and some of the industry’s most progressive terrain parks and half pipes. PCMR’s location gives easy access to outstanding lodging, dining and shopping in the vibrant town of Park City.
Kirkwood Mountain Resort (“Kirkwood”) - located southwest of Lake Tahoe and offers a unique location atop the Sierra Crest. Kirkwood is recognized for offering some of the best high alpine advanced terrain in North America with 2,000 feet of vertical drop and over 2,300 acres of terrain.
Urban Ski Areas - Afton Alps Ski Area (“Afton Alps”) is the largest ski area near a major city in the Midwest (33 miles from the Minneapolis/St. Paul metropolitan area) and offers 48 trails on 300 skiable acres, with night skiing, riding and tubing. Mount Brighton Ski Area (“Mt. Brighton”) is located 43 miles from Detroit and offers 26 trails on 130 skiable acres offering night skiing and riding. Both Afton Alps and Mt. Brighton underwent transformative upgrades for the 2013/2014 ski season to enhance the ski and base area experience for skiers and riders in each market.

Vail Mountain, Beaver Creek, Breckenridge and Keystone are all located in the Colorado Rocky Mountains. Heavenly, Northstar and Kirkwood are all located in the Lake Tahoe region of California/Nevada. Canyons is located in Utah. All of these are year-round mountain resorts that provide a comprehensive resort experience to visitors with an attractive demographic profile. Each resort offers a broad complement of winter and summer recreational activities, including skiing, snowboarding, snowshoeing, snow tubing sightseeing, mountain biking, guided hiking, children’s activities and other recreational activities.

The Mountain segment derives revenue through the sale of lift tickets and season passes as well as a comprehensive offering of amenities available to guests, including ski and snowboard lessons, equipment rentals and retail merchandise sales, a variety of dining venues, private club operations and other winter and summer recreational activities. The company also leases some of their owned and leased commercial space to third party operators to add a variety of restaurants and retail stores to the resorts.

The Lodging Segment

The Lodging segment includes the following operations:

RockResorts -- a luxury hotel management company with a current portfolio of six properties, including four Company-owned hotels and two managed resort properties with locations in Colorado and Jamaica.
Five additional Company-owned hotels, management of the Vail Marriott Mountain Resort & Spa, Mountain Thunder Lodge, Crystal Peak Lodge, Austria Haus Hotel, Grand Summit Hotel, Silverado Lodge, Sundial Lodge and condominium management operations which are in and around the mountain resorts in the Colorado, Lake Tahoe and Park City, Utah regions.
Two National Park System concessionaire properties - GTLC, a summer destination resort with three resort properties in the Grand Teton National Park, and Headwaters Lodge & Cabins at Flagg Ranch located between Yellowstone National Park and Grand Teton National Park.
CME -- a resort ground transportation company in Colorado.
Five Company-owned mountain resort golf courses in Colorado, one in Wyoming and one operated in Lake Tahoe, California.

The Real Estate Segment

The company has extensive holdings of real property at their mountain resorts throughout Summit and Eagle Counties in Colorado. Their real estate operations, Vail Resorts Development Company, include planning, oversight, infrastructure improvement, development, marketing and sale of our real property holdings. In addition to the cash flow generated from real estate development sales, these development activities benefit the Mountain and Lodging segments by (1) creating additional resort lodging and other related facilities and venues (primarily restaurants, spas, commercial space, private mountain clubs, skier services facilities and parking structures) that provide us with the opportunity to create new sources of recurring revenue, enhance the guest experience and expand our destination bed base, (2) controlling the architectural themes of our resorts, and (3) expanding the property management and commercial leasing operations.

Currently, Vail Resorts Development Company’s principal activities include the marketing and selling condominium units related to The Ritz-Carlton Residences, Vail, and One Ski Hill Place in Breckenridge; planning for future real estate development projects; and the occasional purchase of selected strategic land parcels for future development as well as the sale of land parcels to third-party developers.

Finally, Vail Resorts Retail (VRR) manages a collection of approximately 200 individually styled ski, bike, golf and fly fishing shops located throughout Colorado, northern California, Nevada, Utah and Minnesota that cater to outdoor enthusiasts seeking the best products with the best service and the best value. Ski and snowboard rentals are offered at Breeze Ski Rental and online through Rentskis.com, a division that offers rental services at most major western resort destinations as well as direct-to-lodging delivery services at all Vail Resorts properties.

My Perspective

I find myself extremely attracted to this very interesting niche investment. It's a small company targeted toward those rich individuals who are little affected by the overall economy. Hence, the company is also unaffected by the overall economy and would be expected to do well in the years ahead.

Looking at the numbers above it can be noted that the estimated 5 year growth in earnings is projected to increase at a rate in excess of 42% per year. That's a tremendous amount of growth for any company and it's the kind of estimates I love to see in any company I'm investing in. It can also be seen that previous earnings and dividend growth rates for Vail Resorts have been growing even faster. I expect this slow down of these fundamentals to grab hold over the next year so this is one reason I'm not in any hurry to buy these shares at these prices

On the downside, it's also obvious that the company hasn't gone undiscovered by investors. The P/E ratio (37.52) is extremely high and twice what I would normally like to pay for a company. It can also be seen that the company's PEG (0.89) is less than one and that tells me that the earnings are growing even faster than the P/E (which is also incredible!).

So here's my strategy for this obtaining shares in this company. Since I'm in no hurry to own these shares, this is a perfect candidate for executing the option strategy of buying shares by selling cash secured puts. The put(s) can be sold at a strike price that will lock in both an acceptable entry price and an excellent dividend yield. It's an excellent strategy but this strategy can often take awhile to execute if the puts are executed to far out of the money. However, it has the advantage of providing premium (income) while an investor waits for execution to occur. Finally, if multiple out-of-the-money puts are allowed to expire and resold, the initial entry price can be reduced significantly when the option is eventually "put" to the investor. And a low entry price creates a high dividend yield.

I'm an Investor, not a Writer

8/20/2015

A couple of years ago I had an idea to create a website around my two passions - investing and photography. I really didn't know a lot about websites and I wasn't a professional writer by any stretch of the imagination, but I was an experienced individual investor and an avid amateur photographer. So I spent a little time thinking about what I wanted to do with this site and how I wanted to lay out the contents, and the result ended up being the beginning of this website. And over time it has continued to evolve until it is what you see here today.

You'll find none of those irritating advertisements on this site. No pop-ups, no newsletters, no requests for you personal information. Just the strategies and tactics and tactics I use when investing my own personal funds in the markets. I've made the conscious decision to resist any advertising on the investing portion of the site and still deciding if any advertising will ever appear on the photography portion. Perhaps one day I may allow very limited advertisements on the photography side if I can find what I consider appropriate support from camera equipment companies but for now there aren't any advertisements on either side of the site. I'm hoping to keep it that way for a very long time.

My Disclaimer: "I am not a licensed investment adviser, and I am not providing investment advice for you on this site. Please consult with an investment professional before you invest your money. Any opinion expressed here should not be treated as investment advice. I am not liable for any losses suffered by any party because of data or information published on this blog. Past performance is not a guarantee of future performance. Unless your investments are FDIC insured, they may decline in value."

Now I’m not against making lots of money (you'll notice that I do write articles about investing in the stock market) but I’ve been perplexed by all those advertisements I see on other investing websites. I understand the idea behind all that obnoxious and irritating advertising. I just don't particularly like it.

Financial writers (bloggers) create somewhat interesting websites for the sole purpose of selling advertising space on their site to naive readers looking for free information or opinions on some interesting investing ideas. At times those advertisements may even look like content. Readers are then expected to click on those ads and the site owner, in return, makes money. It's a "pay-per-click" moneymaker for the site owner.

This is a fairly simple concept to understand, but it makes me wonder why any investing sites would have any advertisements on them at all. Think about it. Is the purpose of the site to sell ads? Or is it to provide information and opinions on investing? Do the advertisements make more money for the website author than simply executing the advice that’s being provided? If not, then why doesn't the author just use his own advice and invest accordingly? Surely there's a hundred times more money to be made by buying and selling stocks and options and collecting dividends using the website's advice (if the advice is any good, that is) than there would be in the few pennies, quarters, or dollars made from all those annoying advertisements.

"Advertising is the art of convincing people to spend money they don't have for something they don't need."
-- Will Rogers, Humorist

I find most advertisements annoying or down right irritating on those other investing sites. I also assume that others would find them annoying if I put any on mine. So I haven't. Fortunately for anyone visiting this site and reading these articles I have the luxury of not having to pay for this site (so far) because it is so graciously hosted by Weebly.com for free.

I’ve had other websites in the past and I can honestly say this is the best development site I have ever used. Weebly.com makes putting websites up on the net easy and simple. If anyone wishes to create a website for just about any purpose, I highly recommend you at least visit their site and spend a little time reading their literature. You’ll be surprised at just how user friendly it is. It’ll allow you to quickly get past the mechanics of putting a website together and allow you to concentrate on the content you want to include on your site. And that should be what your website is all about, right?

"The public doesn't particularly care for advertisements."
-- John C. Malone, Chairman of Liberty Media

If you've read any of my articles you've come to understand that I write about my investing style and the stocks that I am or am not investing in at the moment. I also include many of my investing ideas and the reasoning and rationale behind my buys and sells. I do not charge to visit my site and I don't sell advertising. I put it all out there and with both quantitative data and enough hot links that I can be checked and criticized.

I have a relatively simple investing philosophy and only a few guidelines and processes. To tell the truth, I sometimes think I’m just repeating that philosophy and those guidelines and processes from article to article to article. But I may be wrong. In the end only the readers of these articles can really decide if these articles are repetitive or redundant. I’ll eventually find out when the statistics of this website start to falter.

Hopefully each article articulates or explains a slightly new or different approach to the way I invest. And hopefully I can spark a new idea in the minds of those who read these articles. It’s just one of the reasons I continue to write. But most important of all, I’m not just writing about the topic of investing, I’m writing about the strategies and methods I use when I’m investing with my own money.

So how do I make money with this website?

At this point you may be asking yourself exactly how can I afford to write all these articles. Or how do I make money writing these articles? Well, I don’t. Not a dime. These articles are truly a labor of love. But before you start to feel sorry for me, I must tell you that I do make money from these articles in a round about way. The way I make money from this site is by taking my own investing advice. I actually research, write and then do the things I discuss in my articles. The result is that I'm able to make some very profitable trades by taking my own advice. Writing these articles ends up being my way of clarifying my ideas about the investing I do. They end up being a catharsis for me. They’re my epiphany.

If no one ever reads these articles they’ve still been worth creating just for the fact that they have improved my understanding of the markets and my trading. Every day my trading strategy becomes clearer and clearer to me. If I ever begin to second guess my decisions, I simply refer to my earlier articles. These articles continue to reassure me on a daily basis that my investing philosophy, guidelines and processes remains on track. And if any of this has helped anyone else, then all the better.

Hopefully someday my kids will become interested in beginning their own journey of building wealth and securing that financial freedom and security that seems to have eluded me so far, but always seems to be just around the corner. It's an exciting journey but it takes years to complete. Luckily I have many years left!

Apple Inc

8/17/2015

Apple Inc has become a value company whose biggest followers are momentum investors. Smart investors can take advantage of that fact very easily. The fundamentals will tell you that this is a company to own and the momentum investors will make the stock price bipolar. Buy when they hate it and sell some when they love it. But never be completely out of it.

There's not much to discuss about Apple that hasn't been written about on the internet, in the newspapers or magazines, put in a book or made into a movie, so I have no intention of repeating any of that here. There's better information elsewhere. What I am going to point out is that the stock seems to run up prior to their announcements and then pullback after the announcements. I'd also like to point out that even LT Dan and Forrest Gump were smart enough to buy stock in Apple, Inc. And finally, if I ever find another company that kicks out the entrepreneur that started the company, subsequently ran it into the ground, and then had to bring back the original creator, I think I probably need to get into that stock as soon as possible.

Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, watches, and portable digital music players worldwide. The company also sells related software, services, accessories, networking solutions, and third-party digital content and applications. It offers iPhone, a line of smartphones that comprise a phone, music player, and Internet device; iPad, a line of multi-purpose tablets; Mac, a line of desktop and portable personal computers; iPod, a line of portable digital music and media players, such as iPod touch, iPod nano, and iPod shuffle; and Apple Watches, personal electronic devices that combine watch technology with an iOS-based user interface. The company also provides iTunes app and the iTunes Store; Mac App Store that allows customers to discover, download, and install Mac applications; iCloud, a cloud service; Apple Pay for making mobile payments; Apple TV, a portfolio of consumer and professional software applications; iOS and OS X operating systems software; iLife, a consumer-oriented digital lifestyle software application suite; iWork, an integrated productivity suite designed to help users create, present, and publish documents, presentations, and spreadsheets; and other application software, including Final Cut Pro, Logic Pro X, and its FileMaker Pro database software. In addition, it offers various Apple-branded and third-party Mac-compatible and iOS-compatible accessories, including headphones, cases, displays, storage devices, and various other connectivity and computing products and supplies. The company sells and delivers digital content and applications through the iTunes Store, App Store, iBooks Store, and Mac App Store; and sells its products through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. The company was founded in 1977 and is headquartered in Cupertino, California.
(Summary) (Company) (Daily Chart)

16 August 2015
Price $116.00
1yr Target $146.88
Analysts 44
Dividend $2.08
Payout Ratio 24.01%
1yr Cap Gain 26.62%
Yield 1.79%
1yr Tot Return 28.41%

Market Cap $661.29 Bil
1yr EarnGR 43.41%
3yr EarnGR 13.45%
5yr EarnGR 33.76%
1yr DivGR 10.63%
3yr DivGR 39,58%
5yr DivGR ---
Revenues $224.34 Bil
Earnings $50.74 Bil

Beta 0.91
EPS (ttm) $8.66
EPS next yr $9.78
P/E 13.39
PEG 0.91
Debt/Equity 0.43
ROA 19.70%
ROE 41.50%
ROI 26.20%

My Perspective

I like Apple Inc and I have owned shares in this company for quite a while. I also witnessed in 2012 the transition of Apple from a growth company to a value company with the initiation of its first dividend in 15 years. That was a huge differentiation and many investors still haven't come to the conclusion that the company and the stock really has changed.

Two areas of caution with this stock that every investor should be aware of and should monitor. Apple is highly dependent on the their iPhone for the biggest part of their sales and they are counting on China to drive those sales forward. They also have the Apple watch which is ramping up in sales but probably won't be a large part of their revenues for the next couple of years and there's always those rumors about what Apple is doing in the area of Apple TV, developing a standalone television, and creating content for television in conjunction with iTunes.

But after all is said, this company has a P/E ratio under 14, a PEG under 1, and a payout ratio under 25%. Those are numbers that are hard to find for any company out there. Add even though they only re-started their dividends in 2012, their dividend growth rate is likely to be around current level of 10% per year going forward.

Recently the momentum investors have been pushing the stock down from its recent high near $132 and today it sits at $116 Just getting back to where it was will be a 13.79% increase from today and 44 analysts think its going to $146.88 within a year (and that's a 26.62% gain). At this price I'm buying all I can.

Avocados

8/12/2015

The world is becoming fascinated with that little fruit with the big nut - the avocado. It's something that Texans and Californians have known about for centuries and now the rest of the world wants it too. Today I want to look at two companies operating in two different parts of the avocado business but very much dependent on each other. One is Calavo Growers (short for CALifornia AVOcados) which simply markets and distributes the fruit but does not grow the product, and Limoneira which is an agribusiness company that grows the fruit but doesn't distribute it.

The interesting thing about these two companies is that they are both located in Santa Paula, California, which is located near Simi Valley, just north of Los Angeles. As a result they are both very familiar with each others operations and have, over the years, become very dependent on each other. Calavo Growers needs avocados and Limoneira grows them. In fact, Calavo Growers has an agreement with Limoneira (as with other avocado growers) to buy all of their product each year for use in prepared avocado products and in other perishable foods to food distributors, wholesalers, and food markets.

Calavo Growers, Inc. markets, and distributes avocados, prepared avocados, and other perishable foods to food distributors, produce wholesalers, supermarkets, convenience stores, and restaurants worldwide. It operates in three segments: Fresh Products, Calavo Foods, and RFG. The Fresh products segment grades, sizes, packs, cools, and ripens avocados for delivery to the customers; and procures avocados grown in Chile and Mexico, as well as various other commodities, including tomatoes, papayas, and pineapples. The Calavo Foods segment procures and processes avocados into various guacamole products; distributes the processed products to customers; and prepares various fresh salsa products. The RFG segment produces, markets, and distributes fresh-cut fruits, ready-to-eat vegetables, recipe-ready vegetables, and deli meat products. The company offers its products primarily under the Calavo and RFG brands, and related logos; and Avo Fresco, Bueno, Calavo Gold, Calavo Salsa Lisa, Salsa Lisa, Celebrate the Taste, El Dorado, Fresh Ripe, Select, Taste of Paradise, The First Name in Avocados, Tico, Mfresh, Maui Fresh International, Triggered Avocados, ProRipeVIP, Garden Highway Fresh Cut, Garden Highway, and Garden Highway Chef Essentials trademarks. The company was founded in 1924 and is headquartered in Santa Paula, California.
(Summary) (Company) (Daily Chart)

9 August 2015
Price $54.60
1yr Target $59.00
Analysts 3
Dividend $0.75
Payout Ratio 93.75%
1yr Cap Gain 8.05%
Yield 1.37%
1yr Tot Return 9.42%

Market Cap $948.95 Mil
1yr EarnGR ---
3yr EarnGR ---
5yr EarnGR ---
1yr DivGR 7.14%
3yr DivGR 10.77%
5yr DivGR 8.44%
Revenues $835.80 Mil
Earnings $14.10 Mil

Beta 0.40
EPS (ttm) $0.80
EPS next yr $2.23
P/E 68.25
PEG 6.82
Debt/Equity 0.27
ROA 4.90%
ROE 8.40%
ROI 0.00%

Limoneira Company operates as an agribusiness and real estate development company in the United States and internationally. The company operates in three segments: Agribusiness, Rental Operations, and Real Estate Development. The Agribusiness segment engages in farming and lemon packing and sales operations. This segment grows lemons, avocados, oranges, and various specialty citrus and other crops, such as Moro blood oranges, Cara Cara oranges, Minneola tangelos, Star Ruby grapefruit, pummelos, pistachios, cherries, peaches, plums, and olives, as well as packs and sells lemons grown by others. This segment markets and sells lemons directly to food service, wholesale, and retail customers. It has approximately 4,000 acres of lemons, 1,200 acres of avocados, 1,400 acres of oranges, and 700 acres of specialty citrus and other crops in Ventura, Tulare, and San Bernardino counties in California and in Yuma County in Arizona. The Rental Operations segment rents residential and commercial properties, such as office buildings and a multi-use facility consisting of a retail convenience store, gas station, car wash, and quick-serve restaurant; and leases approximately 600 acres of land to third party agricultural tenants. This segment is also involved in organic recycling activities. The Real Estate Development segment develops land parcels, multi-family housing, and single-family homes with approximately 1,800 units in various stages of planning and development. Limoneira Company was founded in 1893 and is headquartered in Santa Paula, California.
(Summary) (Company) (Daily Chart)

9 August 2015
Price $20.33
1yr Target $30.87
Analysts 3
Dividend $0.18
Payout Ratio 40.00%
1yr Cap Gain 51.84%
Yield 0.88%
1yr Tot Return 52.72%

Market Cap $287.06 Mil
1yr EarnGR 16.66%
3yr EarnGR 55.80%
5yr EarnGR ---
1yr DivGR 5.88%
3yr DivGR 9.29%
5yr DivGR 13.93%
Revenues $109.10 Mil
Earnings $6.60 Mil

Beta 1.74
EPS (ttm) $0.45
EPS next yr $0.71
P/E 45.18
PEG 2.01
Debt/Equity 0.74
ROA 2.60%
ROE 5.50%
ROI 3.40%

Calavo Growers, Inc. is a global leader in the avocado industry and an expanding provider of value-added fresh food. Their expertise in marketing and distributing avocados, prepared avocados, and other perishable foods allows them to deliver a wide array of fresh and prepared food products to food distributors, produce wholesalers, supermarkets, convenience stores, and restaurants on a worldwide basis. Basically they procure avocados from California, Mexico, and Chile, and then ripen, sort, and pack those avocados for sale. Additionally, they also produce salsa and prepare ready-to-eat produce and deli products for sale both domestically and internationally. The company operates in three different business segments: Fresh products, Calavo Foods and RFG.

Fresh products

Calavo was founded in 1924 to market California avocados. In California, the growing area stretches from San Diego County to Monterey County, with the majority of the growing areas located approximately 100 miles north and south of Los Angeles County. Calavo sells to a diverse group of supermarket chains, wholesalers, food service and other distributors, under the Calavo family of brand labels, as well as private labels.

During fiscal year 2014, their 5 largest and 25 largest fresh fruit customers represented approximately 17% and 40% of their total consolidated revenues. During fiscal year 2013, their 5 largest and 25 largest fresh customers represented approximately 20% and 41% of their total consolidated revenues. During fiscal year 2014, 2013 and 2012 none of their fresh customers represented more than 10% of total consolidated revenues.

The Hass variety of avocado is the predominant variety marketed on a worldwide basis and California grown Hass avocados are available year-round, with peak production periods occurring between January through October. Other varieties have a more limited picking season and generally command a lower price. Approximately 1,900 California growers deliver avocados to Calavo pursuant to a standard marketing agreement. Calavo's share of the entire California avocado crop has remained at approximately 24% of all shipped avocados. Their solid foothold in the California industry is due to the competitiveness of the returns they pay to their customers and the communication and service they provide to their growers. Their ongoing strategy is for Calavo to continue its efforts in aggressively recruiting new growers, retaining existing growers, and procuring a larger percentage of the California avocado crop.

Calavo also imports avocados from Mexico and Chile. Their strategy is to increase their market share of currently sourced avocados to all accepted marketplaces. They believe their diversified avocado sources provide a level of supply stability that may, over time, help solidify the demand for avocados among consumers in all markets. They typically purchase Mexican avocados from growers and packers located in Mexico. The purchase price they pay for fruit acquired from Mexican growers is generally negotiated for substantially all the fruit in a particular grove. Once a purchase price is agreed to, the fruit is then harvested and delivered to their packinghouse located in Uruapan, Michoacán, Mexico, for shipment to the US. In fiscal year 2012, Calavo completed an expansion of our Uruapan packinghouse that more than doubled their capacity to handle Mexican avocados.

Calavo believes that their continued success in marketing Mexican avocados is largely dependent upon securing a reliable, high-quality supply of avocados at reasonable prices, and keeping the handling costs low. The Mexican avocado harvest, which is often considerably larger than the California avocado harvest, is both complimentary and competitive with the California market, as the Mexican harvest is near year round (most significant from September to June). During 2014, Calavo packed and distributed approximately 20% of the avocados exported from Mexico into the United States and approximately 5% of the avocados exported from Mexico to countries other than the US.

The company also procures a limited amount of avocados from Chile. Since the Chilean growing season is complimentary to the California season (August through February), Chilean avocados are able to command a competitive retail price in the market. During 2014 Calavo distributed an a very small percentage of the total amount of avocados imported into the US.

The perishable food products developed by Calavo include various other fruits and vegetables, including tomatoes, papayas, and pineapples. The majority of the company's perishable food sales are generated from tomatoes and papayas. Fortunately sales of their diversified fresh products do not generally experience significant fluctuations due to seasonality.

Calavo Foods

The Calavo Foods segment was originally conceived as a mechanism to stabilize the price of California avocados by reducing the volume of avocados available to the marketplace. In the 1960’s and early 1970’s, the company pioneered the process of freezing avocado pulp and developed a wide variety of guacamole recipes to address the diverse tastes of consumers and buyers in both the retail and food service industries. One of the key benefits of frozen products is their long shelf life. With the introduction of low cost processed products delivered from Mexican based processors, however, the company realigned the segment’s strategy by shifting the fruit procurement and pulp processing functions to Mexico.

Calavo utilizes ultra-high pressure technology equipment which is designed to protect and safeguard their avocado and guacamole products without the need for preservatives. Using high pressure only, this procedure substantially destroys the cells of any bacteria that could lead to spoilage, food safety, or oxidation issues. Once the procedure is complete, packaged guacamole is cased and shipped to various retail, club, and food service customers in the US and abroad. By the year 2010, the company had two 215L ultra high pressure machines in service. These machines located in Uruapan, pressurize all guacamole product lines, including all frozen products. A 3rd ultra-high pressure machine, with a larger capacity of 350L, was put into service during 2012. Net sales of the ultra high pressure (fresh) products sold to retail customers represented 45% and 46% of the total guacamole products sales for the years 2014 and 2013.

In February 2010, the company acquired a 65 percent ownership interest in newly created CSL which acquired substantially all of the assets of LSC. LSC is a regional producer in the upper Midwest of Salsa Lisa refrigerated salsas. The company believes that this line of salsa will further diversify their product offerings and be a natural complement to their ultra high pressure guacamole.

RFG

In June 2011, Calavo, CG Mergersub LLC (Newco), Renaissance Food Group, LLC (RFG) and Liberty Fresh Foods, LLC, Kenneth Catchot, Cut Fruit, LLC, James Catchot, James Gibson, Jose O. Castillo, Donald L. Johnson and RFG Nominee Trust (collectively, the Sellers) entered into an Agreement and Plan of Merger dated May 25, 2011 (the Acquisition Agreement), which sets forth the terms and conditions pursuant to which Calavo would acquire a 100 percent ownership interest in RFG. Pursuant to the Acquisition Agreement, Newco, a newly formed Delaware limited liability company and wholly-owned subsidiary of Calavo, merged with and into RFG, with RFG as the surviving entity. RFG is a fresh-food company that produces, markets, and distributes nationally a portfolio of healthy, high quality products for consumers via the retail channel.

RFG products range from fresh-cut fruit, ready-to-eat vegetables, recipe-ready vegetables and deli meat products. RFG sells under the popular labels of Garden Highway Fresh Cut, Garden Highway, and Garden Highway Chef Essentials to a wide range of customers. During fiscal year 2014, our 5 largest and 25 largest RFG product customers represented approximately 24% and 32% of our total consolidated revenues. During fiscal year 2013, our 5 largest and 25 largest RFG product customers represented approximately 18% and 27% of our total consolidated revenues. During fiscal years 2014, 2013 and 2012 none of our RFG product customers represented more than 10% of total consolidated revenues.

The Limoneira Company is an agribusiness and real estate development company founded and based in Santa Paula, California, committed to responsibly using and managing their approximately 10,500 acres of land, water resources and other assets to maximize long-term stockholder value. Their current operations consist of fruit production, sales and marketing, rental operations, real estate development and capital investment activities.

Limoneira is one of California’s oldest citrus growers. According to Sunkist Growers, Inc. (“Sunkist”), they are one of the largest growers of lemons in the US and, according to the California Avocado Commission, one of the largest growers of avocados in the US. In addition to growing lemons and avocados, the company grows oranges and a variety of specialty citrus crops. The company has agricultural plantings throughout Ventura, Tulare and San Bernardino Counties in California and in Yuma County in Arizona, which consist of approximately 4,000 acres of lemons, 1,200 acres of avocados, 1,400 acres of oranges and 700 acres of specialty citrus and other crops. They also operate their own packinghouses in Santa Paula, California and Yuma, Arizona, where they process, pack and sell lemons that they grow as well as lemons grown by others.

Water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land they own or lease. Water for the California farming operations is sourced from the existing water resources associated with the land, and includes the rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore, Santa Barbara and Paso Robles Basins (aquifers). They also use ground water and water from the local water districts in Tulare County and the ground water in San Bernardino County. Following the acquisition of Associated Citrus Packers, the company began using ground water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District.

For more than 100 years, Limoneira has been making strategic investments in California agricultural and real estate development. The company currently has five active real estate development projects in California. These projects include multi-family housing and single- family homes comprising approximately 200 completed units and another approximately 1,800 units in various stages of planning and entitlement.

Business Segments

Limoneira operates in three segments: agribusiness, rental operations, and real estate development. The agribusiness segment includes farming, packing and sales operations. The rental operations segment includes residential and commercial rentals, leased land operations and organic recycling. The real estate development segment includes real estate projects and development.

1. Farming

Limoneira is one of California’s oldest citrus growers and one of the largest growers of lemons and avocados in the US. In addition to growing lemons and avocados, the company grows oranges and a variety of specialty citrus and other crops. They have agricultural plantings throughout Ventura, Tulare and San Bernardino Counties in California and Yuma County in Arizona, which collectively consist of approximately 4,000 acres of lemons, 1,200 acres of avocados, 1,400 acres of oranges and 700 acres of specialty citrus and other crops. They also operate their own packinghouses in Santa Paula, California and Yuma, Arizona, where they process, pack and sell lemons that they grow as well as lemons grown by others.

Avocados. Limoneira is one of the largest avocado growers in the US with approximately 1,200 acres of avocados planted throughout Ventura County. Over the last 70 years, the avocado has transitioned from a single specialty fruit to an array of 10 varieties ranging from the green-skinned Zutanos to the black-skinned Hass, which is the predominant avocado variety marketed on a worldwide basis. Because of superior eating quality, the Hass avocado has contributed greatly to the avocado’s growing popularity through its retail, restaurant and other food service uses. Approximately 98% of our avocado plantings are of the Hass variety.

The company provides all of their avocado production to Calavo Growers, Inc. Calavo’s customers include many of the largest retail and food service companies in the US and Canada. The company's marketing relationship with Calavo dates back to 2003. Calavo’s proximity to Limoneira's agricultural operations enables the company to keep transportation and handling costs to a minimum. The company's avocados are packed by Calavo and sold and distributed under its own brands.

Primarily due to differing soil conditions, the care of avocado trees is intensive and have changed dramatically over the years. The need for more production per acre to compete with foreign sources of supply has required the company to take an important lead in the practice of dense planting (typically four times the number of avocado trees per acre versus traditional avocado plantings) and mulching composition to help trees acclimate under conditions that more closely resemble those found in the tropics.

Lemons. The company markets and sells lemons directly to food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and certain other international markets. We are one of the largest lemon growers in the United States with approximately 4,000 acres of lemons planted primarily in Ventura and Tulare Counties in California and in Yuma County, Arizona. In California, the lemon growing area stretches from the Coachella Valley to Fresno and Monterey Counties, with the majority of the growing areas being located in the coastal areas from Ventura County to Monterey County. Ventura County is California’s top lemon producing county. Approximately 45% of the company's lemons are grown in Ventura County, 30% in Tulare County, 25% in Yuma County, Arizona and 5% in San Bernardino County, California.

Approximately 90% of our lemon plantings are of the Lisbon and Eureka varieties and approximately 10% are of other varieties such as sweet Meyer lemons, proprietary seedless lemons and pink variegated lemons.

Oranges. While Limoneira is known for its high-quality avocados and lemons, they also grow oranges. They have approximately 1,400 acres of oranges planted throughout Tulare County, California. For many decades, the Valencia variety of oranges was grown in Ventura County primarily for export to the Pacific Rim. Throughout the late 20th century, developing countries began producing the larger, seedless Navel variety of oranges that successfully competed against the smaller Valencia variety. California grown Navel oranges are available from October to June, with peak production periods occurring between January and April. California grown Valencia oranges are available from March to October, with peak production periods occurring between June and September. Approximately 95% of the company's orange plantings are now of the Navel variety and approximately 5% are of the Valencia variety. The company utilizes Sunkist to market and sell a portion of their oranges under the Sunkist brand to food service wholesale and retail customers.

Specialty Citrus and Other Crops. A few decades ago the company began growing specialty citrus varieties and other crops that they believed would appeal to the changing North American and worldwide tastes. As a result, they currently have approximately 700 acres of specialty citrus and other crops planted such as Moro blood oranges, Cara Cara oranges, Minneola tangelos, Star Ruby grapefruit, pummelos, pistachios and olives.

Acreage devoted to specialty citrus and other crops in California has been growing significantly over the past few decades, especially with the popularity of the Clementine, a type of mandarin orange. Similar to the oranges, a portion of the specialty citrus crop is marketed and sold under the Sunkist brands.

Limoneira markets their other specialty crops, such as pistachios and olives, independently. All of the pistachios are harvested and sold to an independent roaster, packager and marketer of nuts. Olives are harvested and sold to third-party packers and shippers.

Lemon Packing and Sales. Limoneira is the oldest continuous lemon packing operation in North America. We pack and sell lemons grown by us as well as lemons grown by others. Lemons delivered to our packinghouses in Santa Paula, California and Yuma, Arizona are sized, graded, cooled, ripened and packed for delivery to customers. A significant portion of the costs related to our lemon packing operation is fixed. The company's strategy for growing the profitability of our lemon packing operations calls for optimizing the percentage of a crop that goes to the fresh market, or fresh utilization, and procuring a larger percentage of the California and Arizona lemon crop.

2. Rental Operations

Limoneira's rental operations include residential and commercial rentals, leased land operations and organic recycling. The rental operations segment represented approximately 4%, 5% and 6% of fiscal year 2014, 2013 and 2012 consolidated revenues, respectively.

Residential. The company owns and maintains approximately 200 residential housing units located in Ventura and Tulare Counties that they lease to employees, former employees and non-employees. The company is in the process of adding 71 new units in the Santa Paula area as a result of recently receiving approval from the Ventura County Planning Commission to build new residential housing units. These properties generate reliable cash flows which the company uses to partially fund the operating costs of their business and provide affordable housing for many of their employees and the community.

Commercial. The company owns several commercial office buildings and a multi-use facility consisting of a retail convenience store, gas station, car wash, and quick serve restaurant. As with their residential housing units, these properties generate reliable cash flows which the company can use to partially fund the operating costs of their business.

Leased Land. The company leases approximately 600 acres of their land to third party agricultural tenants who grow a variety of row crops such as strawberries, raspberries, celery and cabbage. The leased land business provides the company with a profitable method to diversify the use of their land.

Organic Recycling. With the help of their tenant Agromin, a processor of premium soil products and a green waste recycler located in Oxnard, California, the company has created and implemented an organic recycling program. Agromin provides green waste recycling for cities in Santa Barbara, Los Angeles and Ventura Counties. Limoneira worked with Agromin to develop an organic recycling facility on their land in Ventura County, to receive green materials (lawn clipping, leaves, bark, plant materials) and convert such material into mulch that the company spreads throughout their agricultural properties to help curb erosion, improve water efficiency, reduce weeds and moderate soil temperatures.

3. Real Estate Development.

The company's real estate development segment includes our real estate development operations. The real estate development segment represented approximately 1% of their consolidated revenues in fiscal years 2014, 2013 and 2012, respectively. Their current real estate developments include developable land parcels, multi-family housing and single-family homes with approximately 1,800 units in various stages of planning and development.

Fiscal Year 2014 Highlights and Recent Developments

In June 2013, the company announced plans to build 71 agriculture workforce housing units in Santa Paula, California, that will be available for rent to local agriculture workers and Limoneira employees. The company estimates that the total cost of the development will be approximately $8.8 million and will be completed and available for rent during 2015. When fully occupied, annual rental revenue from the additional housing units is anticipated to be approximately $0.9 million.

In December 2013, the company entered into a construction contract that includes design and construction services for the expansion of their lemon packing facilities in Santa Paula, California. The project is expected to increase the efficiency and capacity of the packing facilities. The project is expected to cost $19 million to $21 million and be operational in 2015.

On June 30, 2014, the company acquired the packing house property, equipment and certain intangible assets of Marlin Packing Company from its sole shareholder, Marlin Ranching Company of Yuma, Arizona.

On August 14, 2014, through their wholly owned subsidiary, Limoneira Chile SpA, Limoneira paid $1.8 million for a 35% interest in Rosales S.A, a citrus packing, marketing and sales business located in La Serena, Chile. In addition, the company has the right to acquire the 52% interest of the majority shareholder of Rosales upon death or disability of Rosales’ general manager for the fair value of the interest on the date of the event as defined in the shareholders’ agreement.

My Perspective

I believe as more and more Latinos immigrate to this country over the next decades they will reinvent and refine the culinary tastes of the US and eventually the rest of the world. That will include many new fruits and vegetables and the avocado will be a huge beneficiary of that change. And I intend to own a piece of that financial tsunami by owning shares in the two companies above.

In addition, anyone who reads my articles knows I'm always interested in farms and timberland. Limoneira is no different. Add to that the fact that Calavo Inc and Limoneira are interconnected not only because Calavo buys all of Limoneira's product, but they are also each other's largest shareholder. I think each company's financial existence depends upon the success of the other and therefore their business relationships will necessarily support each other. I also believe there is a distinct possibility that someday these two companies could combine and become one larger company. The avocado business is a fragmented industry and these companies may be on the verge of becoming a much larger food company along the lines of DelMonte or Dole (although it may take years for that to happen). And I want to own a share of that business.

Outerwall

8/10/2015

Outerwall Inc is the leading provider of automated retail solutions. The company offers convenient products and services that greatly benefit their consumers while at the same time driving traffic and revenue toward the host retailers. This is a great concept and I expect that it will work with just about any product small enough to fit into one of their "vending machines". It also partially fulfills the dreams of earlier generations who dreamed of a automated future that included vending machines and flying cars.

In post World War II Japan these types of convenience machines took off and were integrated into everyday Japanese life, but in the US they were slow to be accepted on any broad scale. Most vending machines were relegated to schools, offices and other work centers where they ended up in break rooms dispensing cant bars, potato chips and soft drinks. It was only with the development of a system interconnect these machines to each other and to a computer based back end were they able to send inventory information back and forth as well as accept payment for services that they started to reach critical mass. Today these machines can be found in almost every major retail establishment. People feel comfortable enough interacting with these machines that I expect this the use of these machines will only grow further and expand as this company adapts this technology to more and more product categories.

Outerwall Inc. provides automated retail solutions primarily in the United States, Canada, Puerto Rico, Ireland, and the United Kingdom. Its Redbox segment owns and operates approximately 43,680 Redbox kiosks in 36,140 locations that enable consumers to rent or purchase movies and video games. The company’s Coinstar segment owns and operates approximately 21,340 coin-counting kiosks in 20,250 locations, which enable consumers to convert their coin to cash, convert coins and paper bills to stored value products, and exchange gift cards for cash. Its New Ventures segment focuses on identifying, evaluating, building, acquiring, and developing innovative self-service concepts in the automated retail space. Outerwall Inc.’s kiosks are located primarily in supermarkets, drug stores, mass merchants, financial institutions, convenience stores, malls, and restaurants. The company was formerly known as Coinstar, Inc. and changed its name to Outerwall Inc. in April 2013. Outerwall Inc. was founded in 1989 and is based in Bellevue, Washington.
(Summary) (Company) (Daily Chart)

9 August 2015
Price $65.29
1yr Target $79.71
Analysts 7
Dividend $1.20
Payout Ratio 17.99%
1yr Cap Gain 22.08%
Yield 1.84%
1yr Tot Return 23.92%

Market Cap $1.18 Bil
1yr EarnGR -16.40%
3yr EarnGR 16.28%
5yr EarnGR 23.95%
1yr DivGR ---
3yr DivGR ---
5yr DivGR ---
Revenues $2.31 Bil
Earnings $125.70 Mil

Beta 1.07
EPS (ttm) $6.67
EPS next yr $7.96
P/E 9.79
PEG 0.98
Debt/Equity 9.48
ROA 7.70%
ROE 142.10%
ROI 17.60

History

The company was founded in 1991 as Coinstar Inc., an organization providing self service kiosks that allowed consumers to convert their coins into cash or stored value products.

In February 2009, Coinstar became the sole owner of the company "Redbox", a business where consumers can rent or purchase movies and video games from self service kiosks, by buying the 47% share owned by McDonalds for $175 million.

On June 28, 2013, shareholders voted to change the company name from Coinstar to Outerwall to remove the association to only one portion of the new company. The on July 2, 2013, Coinstar expanded again by acquiring mobile phone recycling kiosk operators ecoATM for $350 million (not including debt).

Organizational Structure

Redbox operates 43,680 kiosks in 36,140 locations where consumers can rent or purchase movies and video games. These kiosks are located in the U.S., Canada and Puerto Rico, and are installed primarily at leading grocery stores, mass retailers, drug stores, restaurants and convenience stores including Walgreens, Walmart, Kroger and 7-Eleven. The Redbox kiosks supply the functionality of a traditional video rental store yet typically occupy an area of less than ten square feet. Consumers use a touch screen to select their titles, swipe a valid credit or debit card, and receive their movie(s) or video game(s). The process is designed to be fast, efficient and fully automated. Outerwall generates revenue primarily through fees charged to rent or purchase a movie or video game, and they pay retailers a percentage of the revenue. Typically, the daily rental fee at a Redbox kiosk is a flat fee plus tax for each disc and, if the consumer chooses to keep the movie or video game for additional days, the consumer is charged for each additional day at the same daily rental fee. Consumers are able to rent any movie or video game from one location and return it to any other Redbox location without an additional charge. Additionally, consumers can reserve a movie or video game online or with the smart phone application and pick it up at the selected Redbox location.

Coinstar owns and operates 21,340 kiosks in 20,250 locations. Consumers simply their feed loose change into a coin counting kiosks, which counts the change and dispenses a voucher redeemable for cash or, in some cases, issues stored value products at the consumer’s election. In addition, a limited number of kiosks can exchange gift cards for a voucher redeemable for cash. Coinstar kiosks are available throughout the U.S., Canada, Puerto Rico, Ireland and the United Kingdom, where they provide a convenient and trouble-free service to retailers such as Kroger and Walmart. Coinstar kiosks are the only multi-national, fully automated network of self-service coin counting kiosks.

The New Ventures portion of the company identifies, evaluates, builds or acquires and develops innovative self-service concepts in the automated retail space segment. The self-service kiosk concept Outerwall is currently exploring in the marketplace is a consumer product sampling concept SAMPLE it , in the Beauty and Consumer Packaged Goods sector.

In the Electronics sector Outerwall acquired and continues to build the ecoATM business which provides an automated self-service kiosk where consumers can recycle mobile devices for cash and generates revenue through the sale of devices collected at our kiosks to third parties. The company began reporting the results of this business in our New Ventures segment subsequent to its acquisition in the third quarter of 2013. The company ended 2014 with approximately 1,890 kiosks in service.

Strategic Investments. Outerwall continually looks at additional uses of its kiosk concept and may make strategic investments in external companies that provide automated self service kiosk solutions. In the Health sector the company has invested in SoloHealth, a kiosk which dispenses pharmaceuticals or medicines.

My Perspective

I think this company's possibilities are almost limitless and that any product small enough to fit into a vending machine can be sold this way 24 hours per day with minimal personal costs. Virtually any high traffic non-commercial area could support these kiosks to provide individuals with personal care products, electronic products and consumables in a more convenient manner that having to search out local stores. I intend to put this company on my watch list to monitor their progress and see if this company is going to push this company forward. I may even obtain a small position just to keep an eye on the company. The recent pullback in the price of the stock makes it easy for me to justify acquiring a small position, especially since the CEO is also increasing the number of shares he owns. I like the Redbox portion but the Coinstar portion is probably too much of a niche product for me. I personally believe the company needs to energize its New Ventures portion of the company and expand rapidly into new areas. They have proven the kiosk concept is a successful concept, they just need to grow the industry.

KAR Auction Services

8/7/2015

KAR Auction Services operates a complete auction solution located in Carmel, Indiana with offices and facilities throughout North America. The company's core business units include ADESA, a wholesale used vehicle operation; Insurance Auto Auctions (IAA), a salvage auto auction company; and Automotive Finance Corporation (AFC), a capital funding source for the used vehicle industry.

KAR operates in an industry that composed primarily of two companies and together they control almost 80% of the market for used car auction services. The remaining 20% is composed of small local auto auctions that will eventually be consolidated into only a handful of companies. The main reason this will happen is because of the high barriers to entry that make it difficult for new entrants to capture significant market share.

The required investment in technology and related infrastructure in addition to ongoing maintenance costs required to meet customers' demands present challenges for new entrants. Large tracts of land and a significant investment in facilities and land improvements are required to build new physical auctions. In addition, the need to comply with regulatory requirements would pose a challenge for new entrants to build a large-scale operation. Larger participants are also able to better develop relationships with many of the major whole car and salvage sellers and buyers, which increases the sellers' flexibility to redistribute vehicles to markets where demand best matches supply in order to maximize proceeds, while also reducing the cost of disposition.

KAR Auction Services, Inc. provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAA, and AFC. The ADESA Auctions segment offers whole car auctions and related services to the vehicle remarketing industry through online auctions and auction facilities. It also provides value-added services, such as auction related, transportation, reconditioning, inspection, title and repossession administration and remarketing, and analytical services. This segment sells its products and services through vehicle manufacturers, rental car companies, and finance companies. The IAA segment offers salvage vehicle auctions and related services that facilitate the remarketing of vehicles for a range of sellers, including insurance companies, dealerships, rental car companies, fleet lease companies, and charitable organizations. This segment also provides title management, vehicle inspection center, and transportation and towing services. The AFC segment offers floorplan financing, a short-term inventory-secured financing, to independent used vehicle dealers. As of December 31, 2014, the company had a network of 65 whole car auction and 168 salvage auction locations. The company was formerly known as KAR Holdings, Inc. and changed its name to KAR Auction Services, Inc. in November 2009. KAR Auction Services, Inc. was founded in 2006 and is headquartered in Carmel, Indiana.
(Summary) (Company) (Daily Chart)

5 August 2015
Price $39.39
1yr Target $42.73
Analysts 11
1yr Cap Gain 8.47%
Dividend $1.08
Yield 2.74%
1yr Tot Return 11.21%

Market Cap $5.58 Bil
1yr EarnGR 147.01%
2yr EarnGR 34.27%
3yr EarnGR 33.12%
1yr DivGR 24.39%
2yr DivGR 131.69%
3yr DivGR ---
Payout Ratio 76.05%

Beta 1.62
EPS (ttm) $1.42
EPS next yr $1.94
P/E 27.74
PEG 2.77
Debt/Equity 1.13
ROA 3.80%
ROE 13.20%

With estimated earnings per share increasing to $1.73 and $1.94 over the next two years, the estimated earnings growth rate would be 45.37% in 2015 and 12.13% in 2016. Estimating that the payout ratio will fall from the current 76% level to a level closer to 60% over the next two years, the dividend could reach $1.10 per share in 2015 and $1.20 per share in 2016. That would result in very lucrative dividend increases of 7.84% in 2015 and 9.09% in 2016.

The Corporate History

KAR Auction Services (formerly KAR Holdings, Inc.) was incorporated in 2006 and commenced operations in April 2007 upon the consummation of the 2007 Transactions. On November 3, 2009, they changed their name from KAR Holdings, Inc. to KAR Auction Services, Inc.

ADESA entered the vehicle remarketing industry in 1989 and first became a public company in 1992. In 1994, ADESA acquired AFC. ADESA remained a public company until 1995 when ALLETE purchased a majority of its outstanding equity interests. In June 2004, ALLETE sold 20% of ADESA to the public and then spun off their remaining 80% interest to shareholders in September 2004. ADESA was then acquired by KAR in April 2007.

IAA entered the vehicle salvage business in 1982, and first became a public company in 1991. After growing through a series of acquisitions, IAA was acquired by affiliates of Kelso & Company and Parthenon Capital in 2005. Affiliates of Kelso & Company and Parthenon Capital and certain members of IAA management contributed IAA to KAR Auction Services in connection with the 2007 Transactions. In a series of transactions between December 2012 and November 2013, the Equity Sponsors sold all of their common stock in secondary offerings.

The Corporate Structure

Today Kar Auction Services is a leading provider of vehicle auction services in North America. They facilitate an efficient marketplace by providing auction services for sellers of used, or "whole car," vehicles and salvage vehicles through their 233 physical auction locations and multiple proprietary Internet venues. In 2014, they facilitated the sale of over 3.9 million used and salvage vehicles. Their revenues are generated through auction fees from both vehicle buyers and sellers, as well as by providing value-added ancillary services, including transportation, reconditioning, inspections, marshalling, titling and floorplan financing. They facilitate the transfer of ownership directly from seller to buyer and generally do not take title to or ownership of vehicles sold through their auctions.

ADESA, their whole car auction services business, is the second largest provider of used vehicle auction services in North America. Vehicles at ADESA's auctions are typically sold by used vehicle dealers, vehicle manufacturers and their captive finance companies, financial institutions, commercial fleet operators and rental car companies to franchised and independent used vehicle dealers. Through ADESA.com, powered by OPENLANE technology, ADESA provides a comprehensive remarking solution to automobile manufacturers, captive finance companies, lease and daily rental car companies, financial institutions and wholesale automobile auctions.

IAA, our salvage auction services business, is one of the two largest providers of salvage auction services in North America. Vehicles at their salvage auctions are typically damaged or low-value vehicles that are predominantly sold by automobile insurance companies, non-profit organizations, automobile dealers, vehicle leasing companies and rental car companies to licensed dismantlers, rebuilders, scrap dealers or qualified public buyers. An important component of ADESA's and IAA's services to their buyers is providing short-term inventory-secured financing, known as floor plan financing, primarily to independent used vehicle dealers through a wholly-owned subsidiary, AFC.

At December 31, 2014, KAR had a network of 65 whole car auction locations and 168 salvage auction locations. Their auction locations are primarily standalone facilities dedicated to either whole car or salvage auctions; however, some of their sites are utilized to service both whole car and salvage customers at the same location. They believe that their extensive geographic network and diverse product offerings enable them to leverage relationships with North American providers and buyers of used and salvage vehicles.

The Three Corporate Business Segments

KAR operates as three reportable business segments: ADESA Auctions, IAA and AFC. Revenues for the year ended December 31, 2014 were distributed as follows: ADESA 52%, IAA 38% and AFC 10%.

ADESA

ADESA serves their customer base through online auctions that are developed and located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely or in person. Their online service offerings include ADESA.com, LiveBlock and DealerBlock and allow them to offer vehicles for sale from any location.

Vehicles available at their auctions include vehicles from institutional customers such as off-lease vehicles, repossessed vehicles, rental vehicles and other program fleet vehicles that have reached a predetermined age or mileage and have been repurchased by the manufacturers, as well as vehicles from used vehicle dealers turning their inventory. The number of vehicles offered for sale at auction is the key driver of our costs incurred in the whole car auction process, and the number of vehicles sold is the key driver of the related fees generated by the remarking process.

ADESA offers online and physical auctions as well as value enhancing ancillary services in an effective and efficient manner to maximize returns for the sellers of used vehicles. They quickly transfer the vehicles and ownership to the buyer and the net funds to the seller. Vehicles are typically offered for sale at the physical auctions on at least a weekly basis at most locations and the auctions are simulcast over the Internet with streaming audio and video (LiveBlock) so that remote bidders can participate via online capabilities. Online auctions (DealerBlock) function 24 hours a day, 7 days a week, providing customers with maximum exposure for their vehicles and the flexibility to offer vehicles at buy now prices or in auctions that last for a few hours, days or even weeks. They also provide customized "private label" selling systems (including buy now functionality as well as online auctions) for customers, primarily utilizing technology acquired with the purchase of OPENLANE.

They generate revenue primarily from auction fees paid by vehicle buyers and sellers. Buyer fees and dealer seller fees are typically based on a tiered structure with fees increasing with the sale price of the vehicle, while institutional seller fees are typically fixed. They add buyer fees to the gross sales price paid by buyers for each vehicle, and generally customers do not receive title or possession of vehicles after purchase until payment is received, proof of floorplan financing is provided or credit is approved. They generally deduct seller fees and other ancillary service fees to sellers from the gross sales price of each vehicle before remitting the net amount to the seller.

IAA

As one of the leading providers of salvage vehicle auctions and related services, the company operates as IAA in the United States and Impact Auto Auctions in Canada and serve our customer base through salvage auction locations throughout North America. They facilitate the re-marking of vehicles for a variety of sellers, including insurance companies, dealerships, rental car companies, fleet lease companies and charitable organizations. Auctions provide buyers from around the globe with the salvage vehicles they need to fulfill their scrap demand, replacement part inventory or vehicle rebuild requirements. Fees for services are earned from both sellers and buyers of salvage vehicles.

IAA processes salvage vehicles primarily on a consignment basis. In return for agreed-upon fees, vehicles are sold on behalf of the sellers, which continue to own the vehicle until it is sold to buyers at auction. Other services available to vehicle sellers, for which fees may be charged, include towing, title processing, inspection services, marketing and other administrative services. Under all methods of sale, IAA also charge fees to the buyer of each vehicle based on a tiered structure that increases with the sale price of the vehicle as well as fixed fees for other services.

Auctions are typically held weekly at most locations. Vehicles are marketed at each respective auction site to live bidders as well as to online bidders via IAA's dual platform auction model. In addition, auction listings are available online, allowing prospective bidders to preview and bid on vehicles prior to the actual auction event. IAA's Auction Center feature provides Internet buyers with an open, competitive bidding environment that reflects the dynamics of a live salvage auction. The Auction Center includes such services as comprehensive auction lists featuring links to digital images of vehicles available for sale, a "Find a Vehicle" function that promotes the search for specific vehicles within the auction system and special auction notifications such as "Rental," "Classic," or "Motorcycles." Higher prices at auction are generally driven by broader market exposure and increased competitive bidding. Their mobile device applications provide great flexibility for buyers who interact with their auctions. In 2014, they received recognition for our technology innovation, including: ranking 33rd in Information Week's Elite 100 and being named as a finalist in the Best Customer App category at the Consumerism in IT (CITE) Awards.

Online tools have also been developed to assist consignors in re-marketing their vehicles and establishing salvage vehicle values. In 2013, they launched the IAA Market Value app via the CSAToday® salvage management platform. The Mobile Assignment feature allows consignors to assign vehicles to IAA virtually anytime, anywhere. The Market Value app allows customers to estimate the value of their vehicle whenever and wherever they need to. Through IAA's auction model, vehicles are offered simultaneously to live and online buyers in a live auction format utilizing i-Bid LIVESM. First, physical auctions allow buyers to inspect and compare the vehicles, enabling them to make fully informed bidding decisions. They are also an important part of the bidding process. Second, our Internet auction capabilities allow buyers to participate in a greater number of auctions than if physical attendance was required. Online inventory browsing and digital alerts (via email or through buyer app) reduce the time required to acquire vehicles.

AFC

AFC is a leading provider of floor plan financing to independent used vehicle dealers. They provide short-term inventory secured financing, known as floor plan financing, to independent used vehicle dealers through branches throughout North America. In 2014, AFC serviced over 1.4 million loan transactions, which includes both loans paid off and loans extended, or curtailed. They sell the majority of their dollar denominated receivables with no recourse to a wholly owned bankruptcy remote special purpose entity, which sells an undivided participation interest in such finance receivables to a group of bank purchasers on a revolving basis. They also securitize the majority of their Canadian dollar denominated finance receivables through a separate third-party facility. They also generate a significant portion of our revenues from fees. These fees include origination, floorplan, curtailment and other related program fees. When the loan is extended or paid in full, AFC collects all accrued fees and interest.

In June 2013, AFC acquired Preferred Warranties, Inc., a vehicle service contract business, as part of our strategy to provide new services to independent used vehicle dealers. AFC receives advance payments for the vehicle service contracts and unearned revenue is deferred and recognized over the terms of the contracts, which range from 3 months to 7 years, on an individual contract basis. The average term of these contracts originated in 2014 was approximately 1.5 years. They currently purchase program insurance which provides for satisfaction of certain of the Company's vehicle service contracts related liabilities in the event the Company is unable to perform under the terms of specific vehicle service contracts covered by program insurance.

My Perspective

This is one of those industries that no one really thinks about very often, if at all. But automobile sales, salvage, maintenance and insurance is a huge business. With only two or three major players in this area, additional consolidation going forward, and a high barrier to entry, this is an industry that's very well entrenched and the future of KAR really looks bright.

I like KAR Auction Services and I intend to start a position in this company in the next few weeks. I'll admit that the price, P/E and PEG are currently a little high but I have the luxury of waiting for a better opportunity to enter a buy. But I like this company's earnings and dividend growth rates. I think this will be a great addition to my portfolio.

I'm Glad I Own L Brands

8/4/2015

It's been about a year since the last time I wrote about and bought L Brands stock and I've done rather well owning those shares. I've not only seen the stock rise in price over the last year but I've seen some rather lucrative dividends too. So today I thought I'd look at L Brand's numbers and its chart and see whether it's still a good time to buy shares in this company. And if it is, I plan to add to my position.

L Brands is composed of two stores that can be found in almost every mall in America - Victoria's Secret and Bath & Body Works. The company also has another outlet simply named Pink that offers many of the same products offered at Victoria's Secret yet geared to a younger audience. The company also has an online presence in which customers can order their products and have them delivered directly to their home. Between Victoria's Secret, Pink and Bath & Body Works, the company is the premiere provider of bras, panties, loungewear, sleepwear, swimwear, athletic attire, fragrances, shower gels and lotions, aromatherapy, soaps and sanitizers, home fragrances, and personal care accessories for women.

L Brands, Inc. operates as a specialty retailer of women’s intimate and other apparel, beauty and personal care products, and accessories. The company operates in two segments, Victoria’s Secret and Bath & Body Works. Its products include loungewear, bras, panties, sleepwear, swimwear, athletic attire, fragrances, shower gels and lotions, aromatherapy, soaps and sanitizers, home fragrances, and personal care accessories. The company offers its products under the Victoria’s Secret, Pink, Bath & Body Works, La Senza, Henri Bendel, C.O. Bigelow, White Barn Candle Company, and other brand names. L Brands, Inc. sells its merchandise through company-owned specialty retail stores in the United States, Canada, and the United Kingdom, which are primarily mall-based; through its Websites and catalogues; and through franchises, licenses, and wholesale partners. As of February 1, 2014, the company operated 2,648 retail stores in the United States; 270 retail stores in Canada; and 5 retail stores in the United Kingdom. It also operated 331 La Senza stores in 30 countries; 55 Bath & Body Works stores in 14 countries; 4 Victoria's Secret stores in 2 Middle Eastern countries; and 198 Victoria’s Secret Beauty and Accessories stores, and various small-format locations in approximately 60 countries. The company was formerly known as Limited Brands, Inc. and changed its name to L Brands, Inc. in March 2013. L Brands, Inc. was founded in 1963 and is headquartered in Columbus, Ohio.
(Summary) (Company) (Daily Chart)

13 August 2014
Price $62.26
1yr Target $62.38
Analysts 25
1yr Cap Gain 0.19%
Dividend $1.36
Yield 2.18%
1yr Tot Return 2.37%

3yr DGR 34.94%
Payout Ratio 43.87%

Beta 1.07
EPS (ttm) $3.10
EPS next yr $3.58
P/E 20.08
PEG 1.80
ROA 13.80%
ROE -137.90%

4 August 2015
Price $80.72
1yr Target $95.73
Analysts 26
1yr Cap Gain 18.59%
Dividend $2.00
Yield 2.47%
1yr Tot Return 21.06%

3yr DGR 25.70%
Payout Ratio 52.49 %

Beta 0.98
EPS (ttm) $3.81
EPS next yr $4.23
P/E 21.19
PEG 2.10
ROA 16.10%
ROE -297.30%

I'm amazed by the numbers above. The stock price has increased by almost 30%. The target price has increased by almost 53%. The dividend has increased by almost 47%. And earnings have increased by almost 23%. Those are incredible numbers for any company.

Conclusion

I like this company quite a bit and I've been in and out of the stock several times since I first discovered it in the 1980s. Over the last year or two I've decided to maintain a position in this company and add to that position over time. This company is 30% higher today than when I wrote the last article on it (see the article L Brands, Inc for additional information and background data) and it's estimated to be up another 18% over the next year. All while paying a dividend of almost 2.5%. Those are phenomenal numbers and I wish every stock I owned did as well.

I also like the benefit and surprise of receiving special dividends at different times of the year. At times these special dividends can often double or even triple the income from the regular dividend.

While this company has not become a core holding for me because of the inconsistency of the company's fundamentals and the finickiness of the fashion industry, it is becoming a bigger and bigger portion of my accounts. Since I believe this company has cornered the market in its segment of the fashion industry and has maintained it's first place position for decades, I think this company will continue to flourish for decades more.

I intend to continue to add to my position in L Brands as funds become available because I believe this is a better buy today than it was last year. And last year was a good year to own L Brands.

The Competition

L Brands, Inc is part of the Apparel Stores Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They are listed in the order of their market capitalization.

The Gap, Inc. (GPS)
L Brands, Inc.
Ross Stores, Inc. (ROST)
Nordstrom, Inc. (JWN)
Abercrombie & Fitch Company (ANF)
DSW Inc. (DSW)
The Men's Warehouse, Inc (MW)
Chico's FAS, Inc. (CHS)
The Buckle, Inc. (BKE)
Guess Inc. (GES)
American Eagle Outfitters, Inc. (AEO)
The Children's Place (PLCE)

The Home Shopping Network

8/4/2015

What was once The Home Shopping Network is now HSN Inc. The company markets and sells a wide range of third party and proprietary private label merchandise directly to consumers. HSN Inc today consists of both HSN, which includes the HSN television networks, digital platforms and mobile, and Cornerstone, which includes a portfolio of catalogs, digital platforms and mobile.

HSN, Inc. operates as an interactive multi-channel retailer in the United States. It operates through two segments, HSN and Cornerstone. The HSN segment offers jewelry, apparel and accessories, beauty and health, and home products, as well as household, home design, electronics, culinary, and other products through television home shopping programming broadcast on the HSN television networks, the HSN.com Website, mobile applications, and outlet stores. The Cornerstone segment provides home furnishings, including indoor/outdoor furniture, home décor, tabletops, textiles, and other home related goods under the Frontgate, Ballard Designs, Grandin Road, and Improvements brands; and apparels under the Garnet Hill, TravelSmith, and Chasing Fireflies brands. As of February 26, 2015, this segment operated 7 digital sales sites; distributed approximately 325 million catalogs; and operated 11 retail and outlet stores. The company markets and sells a range of third party and private label merchandise directly to consumers. HSN, Inc. was founded in 1981 and is headquartered in St. Petersburg, Florida.
(Summary) (Company) (Daily Chart)

1 August 2015
Price $73.51
1yr Target $78.10
Analysts 10
Dividend $1.40
Payout Ratio 41.05%

1yr Cap Gain 6.24%
Yield 1.90%
1yr Tot Return 8.14%

EPS (ttm) $3.41
EPS next yr $4.06

Market Cap $3.86 Bil
1yr EarnGR -00.62%
3yr EarnGR 16.56%
5yr EarnGR 20.71%
1yr DivGR 26.58%
3yr DivGR 98.61%
5yr DivGR ---
Beta 0.87
P/E 21.56
PEG 1.63
Debt/Equity 7.28
ROA 13.70%
ROE 41.30%

Background

HSNi’s predecessor company (The Home Shopping Network) began broadcasting television home shopping programming from its studios in St. Petersburg, Florida in 1981 and, by 1985, was broadcasting this programming through a national network of cable and local television stations 24 hours a day, seven days a week. The company continued to broaden its national distribution network through a combination of cable, satellite and broadcast systems and, as of December 31, 2014, the HSN television networks reached approximately 95.0 million residential homes in the United States.

The company began conducting business online in 1994 and formally launched HSN.com, the online shopping portal for the HSN television network, in 1999.

The company acquired Improvements, a catalog featuring thousands of innovative home, patio and outdoor products, in June 2001, and significantly grew its catalog business through the acquisition of Cornerstone Brands, Inc., with its portfolio of leading print catalogs and related websites, in April 2005.

HSNi was incorporated in Delaware in May 2008 in connection with the spin-off of several businesses previously owned by IAC/InterActiveCorp, or IAC. HSNi was formed to hold HSN and Cornerstone, the businesses that previously comprised most of IAC’s retailing segment. The spin-off from IAC (the "Spin-off") occurred on August 20, 2008 and, in connection with the Spin-off, HSNi's shares began trading on the NASDAQ Global Select Market under the symbol "HSNI."

In early 2012, the Company initiated efforts to strengthen its portfolio of aspirational home and apparel lifestyle catalog brands. This resulted in the acquisition of Chasing Fireflies, LLC, a leading direct-to-consumer premium children's and family's lifestyle brand, in April 2012. This was followed by the divestitures of Smith+Noble, a brand specializing in window treatments, in May 2012 and The Territory Ahead, a brand specializing in casual apparel for men and women, in July 2012.

Today

HSN Inc conducts its business through it two main subsidiaries - HSN and Cornerstone.

1. HSN includes the HSN television networks and other direct-response television marketing; its related website, HSN.com; its mobile applications and a limited number of outlet stores. The HSN television network broadcasts live, customer interactive home shopping programming 24 hours a day, seven days a week. HSN2, which debuted in August 2010, is a network that primarily distributes taped programming on a limited distribution basis. HSN’s programming is intended to promote sales and customer loyalty through a combination of product quality, value and selection, coupled with product information, entertainment and interactive experiences. Programming is divided into separately televised segments, most of which have hosts who present and convey information regarding featured products, sometimes with the assistance of a celebrity, industry expert, representative from the product vendor or someone retained to aid in the sale of the products. HSN also produces entertainment such as live concerts to entertain and engage with customers and promote certain products. HSN.com is a business-to-consumer digital commerce site that sells all of the merchandise offered on the HSN television networks, together with complementary products and select merchandise sold exclusively on HSN.com. HSN provides seamless experiences across all digital platforms and optimizes each unique platform by delivering exclusive content both at HSN.com and on mobile phones and tablets, including the iPad, iPhone and Android and Windows devices. The HSN strategy is to create immersive experiences, offer differentiated products and leverage technology to build seamless relationships with its customers across all of its platforms. HSN fosters social communities as part of the HSN experience to encourage customers to share their product finds, thoughts and reviews with their friends via Facebook, Twitter, Pinterest and Instagram.

As of December 31, 2014 and 2013, the HSN television networks reached approximately 95.0 million homes of the approximately 113.8 million and 115.6 million homes, respectively, in the United States with a television set. Television households reached by the HSN television networks as of December 31, 2014 and 2013 primarily include approximately 64.3 million and 64.1 million households capable of receiving cable and/or telephone company ("Telco") transmissions, respectively, and approximately 30.7 million and 30.9 million direct broadcast satellite system, or DBS, households, respectively.

HSN also includes HSN.com, a transactional e-commerce site that sells merchandise offered on the HSN television networks, as well as select merchandise sold exclusively on HSN.com. HSN.com provides customers with additional content to support and enhance HSN television programming. For example, HSN.com provides users with an online program guide, value-added video of product demonstrations, live streaming video of the HSN television network, customer-generated product reviews and additional information about HSN show hosts and guest personalities. HSN.com offers customers a content-rich experience that houses more than 50,000 product and how-to videos.

2. Cornerstone consists of a portfolio of aspirational home and apparel brands, prominent in the direct marketing and retail space, including catalog distribution and related websites. Although there is some overlap in the product offerings, the home brands are comprised of Frontgate, Ballard Designs, Grandin Road and Improvements. The apparel brands are comprised of Garnet Hill, TravelSmith and Chasing Fireflies. There are also 11 retail and outlet stores located throughout the United States.

Frontgate features premium, high quality, luxury bed, bath, kitchen, outdoor, patio, garden and pool furnishings and accessories. Ballard Designs features bed, bath, dining, outdoor and office furnishings and accessories, as well as rugs, shelving and architectural accents for the home. Grandin Road offers an affordable style assortment of products ranging from occasional furniture, accessories, holiday décor and outdoor furniture and Improvements features thousands of innovative home, patio and outdoor products.

Garnet Hill offers apparel and accessories for women and children as well as bed and bath furnishings and soft goods. TravelSmith offers travel wear for men and women and related accessories. Chasing Fireflies is a leading children's and family lifestyle brand offering keepsake-quality apparel, costumes, gifts and accessories.

The Cornerstone brands generally incorporate on-site photography and real-life settings, coupled with related editorial content describing the merchandise and depicting situations in which it may be used. Branded catalogs are designed and produced in-house, which enables each individual brand to control the production process and reduces the amount of lead time required to produce a given catalog.

New editions of full-color catalogs are mailed to customers several times each year, with a total annual circulation in 2014 of approximately 325 million catalogs. The timing and frequency of catalog circulation varies by brand and depends upon a number of factors, including the timing of the introduction of new products, marketing campaigns and promotions and inventory levels, among other factors.

Cornerstone also operates websites for each of its featured brands, such as Frontgate.com, BallardDesigns.com, Chasing- Fireflies.com, GarnetHill.com, GrandinRoad.com, TravelSmith.com and Improvementscatalog.com. These websites serve as additional storefronts for products featured in related print catalogs, as well as provide customers with additional content and product assortments to support and enhance their shopping experience. Additional content provided by these websites, which differs across the various websites, includes decorating tips, measuring information, online design centers, gift registries and travel centers, as well as a feature that allows customers to browse the related catalog online. In addition, a growing number of customers use mobile devices to shop the Cornerstone brands.

My Perspective

Click to Enlarge

It doesn't take a sophisticated technical analyst to look at the chart on the right and quickly see that investors that bought stock in HSN Inc are a lot more wealthy today than they were just a couple of years ago. And a slightly longer chart (7 years) can be seen below that shows that an investment of just $10,000 in August of 2008 would be worth $82,502.99 today.

Notice in the fundamentals above that the numbers are starting to slow so that's something I'll need to keep an eye on, but this company has a nice track record and a nice chart. I don't think things are going to change going forward and I think management's strategy of moving across digital platforms and creating content that makes their websites "sticky" is going to pay off extremely well. I also think management is smart. I expect this company to continue to grow and expand.

I intend to initiate a position in this company in the next few weeks. With all the momentum indicators a little on the high side, I'll be looking for a pullback in the price before buying these shares (although I don't expect too much of a pullback). With a dividend of $1.40 I'd really like to see the stock fall below $70 to allow the yield to exceed 2%, but that may or may not happen. And if it doesn't, I'll try to get the best entry available.

Click to Enlarge

Author

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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