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Ideas and Strategies on Investing.

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Royal Caribbean and Carnival

11/27/2015

0 Comments

 
Winter is just around the corner so I thought it would be a great idea to look at the Cruise Line companies. These companies seem to have some of the best ideas just as the weather starts to get cold. The obvious lure of the warm waters of the Caribbean are pretty seductive when all you see is snow out your windows. Add to that the rising middle classes in Asia and any investor can see the rising demand. The two largest cruise lines are Royal Caribbean Cruises and Carnival Corporation so that's what I'll look at today.
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Royal Caribbean Cruises operates as a cruise company. The company operates cruisers under the Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, CDF Croisires de France, and TUI Cruises brand names. The Royal Caribbean International brand provides cruise itineraries ranging from 2 to 18 nights with options for onboard dining, entertainment, and other onboard activities to various destinations. The Celebrity Cruises brand offers cruise itineraries ranging from 3 to 23 nights various destinations; and operates onboard upscale ships that offer accommodations, fine dining, personalized services, and spa facilities. The Azamara Club Cruises brand offers cruise itineraries ranging from 4 to 20 nights that serve the up-market segment of the North American, the United Kingdom, and Australian markets. The Pullmantur brand provides cruise itineraries ranging from 2 to 17 nights with various cruising options and onboard activities for couples and families traveling with children. The CDF Croisires de France brand offers seasonal itineraries to the Mediterranean, Europe, and Caribbean markets. The TUI Cruises brand provides onboard activities, services, shore excursions, and menu offerings for the German cruise market. As of December 31, 2014, the company operated a total of 43 ships with itineraries ranging from 2 to 23 nights on approximately 480 destinations worldwide. Royal Caribbean Cruises Ltd. was founded in 1968 and is headquartered in Miami, Florida.
(Summary) (Company) (Chart)
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​Carnival Corporation operates as a cruise company worldwide. It provides vacations to various cruise destinations. The company offers cruise services under the Carnival Cruise Lines, Holland America Line, Princess Cruises, and Seabourn brand names in North America; and AIDA Cruises, Costa Cruises, Cunard, and P&O Cruises names in Europe, Australia, and Asia. It operates 100 cruise ships. It also owns and operates 12 hotels or lodges, and approximately 300 motor coaches and 20 glass-domed railcars. The company sells its cruise services through retail, online and home-based agents, wholesalers, general sales agents, and tour operators. Carnival Corporation was incorporated in 1972 and is headquartered in Miami, Florida. Carnival Corporation operates as a subsidiary of Carnival Corporation & Plc.
(Summary) (Company) (Chart)
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Royal Caribbean Cruises
Price $92.02
1yr Target $101.88
Analysts 22
Dividend $1.50
Payout Ratio 58.36%

1yr Cap Gain 10.71%
Yield 1.63%
1yr Tot Return 12.34%

EPS (ttm) $2.57
EPS next yr $6.20
EPS next 5yr 24.00%
1yr Potential $148.80
P/E 35.81
PEG 1.49
Beta 1.75
Market Cap $20.24 Bil
Revenues $8.21 Bil
Earnings $568.80 Mil
Profit Margin 6.91%

1yr EarnGR 60.28%
3yr EarnGR 7.30%
5yr EarnGR 35.89%
1yr DivGR 48.64%
3yr DivGR 75.51%
5yr DivGR ---
Quick Ratio 0.20
Current Ratio 0.20
Debt/Equity 1.00
ROA 2.70%
ROE 6.90%
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Carnival Corporation
Price $50.39
1yr Target $57.29
Analysts 18
Dividend $1.20
Payout Ratio 67.79%

1yr Cap Gain 13.69%
Yield 2.38%
1yr Tot Return 16.07%

EPS (ttm) $1.77
EPS next yr $3.31
EPS next 5yr 21.00%
1yr Potential $69.51
P/E 28.47
PEG 1.36
Beta 0.78
Market Cap $39.56 Bil
Revenues $15.72 Bil
Earnings $1.39 Mil
Profit Margin 8.84%

1yr EarnGR 14.38%
3yr EarnGR -12.95%
5yr EarnGR -6.63%
1yr DivGR 0.00%
3yr DivGR 0.00%
5yr DivGR ---
Quick Ratio 0.20
Current Ratio 0.20
Debt/Equity 0.32
ROA 3.60%
ROE 5.80%
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​My Perspective

I believe there's more probably more potential for capital gains from these companies than the analysts estimate but I can't really get interested in accumulating these shares. The P/E ratios and PEGs for both of these companies are way too high for my liking. In addition, the quick ratios and current ratios of both of these companies tend make me think that the liabilities are so great that the dividends will eventually be either reduced or deleted entirely. That said, these two companies could possibly be great investments over time based solely upon the increasing demographics of a growing middle class around the world wanting to enjoy this type of vacation. But for me, there's just too many other better investments out there that I'd be a lot more interested in. At least for now I think I'll pass. 
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Celadon Group

11/24/2015

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Celadon Group is one of the largest transportation and logistics companies. Founded in 1985, Celadon now employs over 4,000 associates worldwide whose expertise has delivered reliability and dependability throughout the United States, Canada, and Mexico. In addition, Celadon also offers a wide range of truckload transportation services within the United States, including long-haul, regional, local and dedicated. The Celadon Logistics segment provides freight management services, less-than-truckload consolidation and freight brokerage services. The Celadon Dedicated Services segment offers supply chain management solutions, such as warehousing and dedicated fleet services.
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​Celadon Group, Inc. provides transportation services between the United States, Canada, and Mexico. The company operates through two segments, Asset-Based and Asset-Light. The Asset-Based segment provides United States domestic dry van, refrigerated, and flatbed service; cross-border service between the United States and each of Mexico and Canada; intra-Mexico and intra-Canada service; dedicated contract service; regional and specialized short haul service; and rail intermodal service. The Asset-Light segment offers freight brokerage, warehousing, less-than truckload consolidation, and supply chain logistics services. The company also provides tractor leasing and ancillary services to owner-operators. It transports various types of freight comprising tobacco, consumer goods, automotive parts, home products and fixtures, lawn tractors and assorted equipment, light bulbs, and various parts for engines. Celadon Group, Inc. was founded in 1985 and is headquartered in Indianapolis, Indiana.
(Summary) (Company) (Chart)
23 November 2015
Price $13.63
1yr Target $25.63
Analysts 8
Dividend $0.08
Payout Ratio 5.06%

1yr Cap Gain 88.04%
Yield 0.58%
1yr Tot Return 88.62%
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EPS (ttm) $1.58
EPS next yr $1.83
EPS next 5yr 20.00%
1yr Potential $36.60
P/E 8.63
PEG 0.43
Beta 1.38
Market Cap $379.60 Mil
Revenues $973.50 Mil
Earnings $40.50 Mil
Profit Margin 4.16%
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1yr EarnGR 17.82%
3yr EarnGR 10.60%
5yr EarnGR 53.21%
1yr DivGR 0.00%
3yr DivGR ---
5yr DivGR ---
Quick Ratio 1.70
Current Ratio 1.70
Debt/Equity 1.67
ROA 3.80%
ROE 12.70%
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Celadon Group's primary services involve point-to-point shipping for major customers within the Unites States, between the United States and Mexico, and between the United States and Canada. The company then complements these services with a variety of warehousing, supply chain logistics, tractor leasing, and other services that add value to their customers and professional truck drivers. Since 2012, the company has expanded their business and diversified their service offerings through a series of acquisitions.

The company operates the business through two segments. Their primary segment is referred to as "asset based," and their smaller secondary but growing segment is referred to as "asset light." Asset based services generally require greater ongoing net capital expenditures because the company provides those services using their own tractors and trailers or other company owned assets. Asset light services, on the other hand, require less ongoing net capital expenditures because the company contracts those services to third parties, such as other trucking companies, railroads, or warehouse owners, to provide all or a substantial portion of the assets needed to provide the service. Celadon believes a combination of asset based and asset light services allows the company to take advantage of the opportunity to increase their size, diversification of revenue streams, and importance to customers while managing the company's ongoing net capital expenditures and improving return on invested capital. 

​Celadon's primary asset based services include US domestic dry van, refrigerated, and flatbed service; cross-border service between the US, Mexico and Canada; intra-Mexico and intra-Canada service; dedicated contract service; regional and specialized short haul service; and rail intermodal service. In addition, through the company's Quality Companies subsidiaries, Celadon provides tractor leasing and ancillary services to owner-operators.

Celadon's primary asset light services include freight brokerage, warehousing, less-than truckload consolidation, and supply chain logistics services. The company believes that these services afford the company the opportunity to increase scale and market share with their  customers, serve their customers' needs by covering more of their loads, retain control over freight even when it does not meet Celadon's financial or operating objectives, and concentrate assets toward the most beneficial loads. 

Celadon Dedicated Services provides warehousing and dedicated trucking services. The company's warehouse facilities are located near the customers' manufacturing plants, and the company can transport manufacturing parts to those warehouses and sequence those parts for their customers. The company can then transport any completed units from their customers' plants. In addition, Celadon can also offer less-than-truckload, intermodal, and refrigerated services to all our customers.

Quality Companies Segment. In March of 2014, Celadon entered into a transaction with Element Financial Corp. ("Element"), under which Element purchased Celadon's portfolio of independent contractor leases. Element will now directly provide financing to Celadon's independent contractors. The portfolio of independent contractor leases was held in Celadon's Quality Companies business unit ("Quality"). Quality diversifies Celadon's income stream by providing a suite of “tractors under management” services, which includes tractor purchasing and sales, maintenance, loan and lease servicing, repossession, and other services to independent contractor drivers and their finance providers. Quality has grown significantly from 750 tractors under management at the end of fiscal 2013 to 4,900 tractors under management at the end of fiscal 2015. Quality significantly complements Celadon's core freight business lines for several reasons. First, the market for tractors under management is growing faster than the general truckload freight market. Second, Celadon's consolidated buying power, warranty plans, maintenance experience, and insurance expertise allows the company to provide a differentiated services suite to independent contractors and third-party fleets that may not have the capacity or desire to build those skill sets internally. Third, the Quality business has the potential for more consistent margins, lower capital expenditures and higher return on invested capital than the traditional truckload business. Fourth, Celadon is able to access the entrepreneurial and high-performing segment of the professional truck driving population that otherwise would go unserved. 
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My Perspective

The trucking industry, like the rail industry, seems to be the victim of low commodity prices. This can be easily seen simply by looking at the stock chart of any of the trucking companies or railroads. But like many of these companies the stock chart doesn't agree with what's going on with the company. Just look at the fundamentals and you'll see the divergence. While the fundamentals continue to move higher, the price of the stock continues to move lower. 

This type of situation often produces an opportunity if a smart investor who can recognize a change in sentiment before the trading community begins to reevaluate their positions and start buying rather than selling. I'm currently looking at a number of companies in the transportation industry to try to determine when the sentiment is about to change so that I can get in as this portion of the market begins to turn up. 

I'm starting to see a tremendous opportunity here with Celadon Group. This company is already way oversold and is ripe for a turnaround. At this point the change hasn't occurred. But it will. And I want to be long when it does. I plan on continuing to research a number of transportation companies but Celadon has got to be high on this list. At the first sign of a bottom I intend to start a position in this and other transportation stocks because I believe that once the bottom is found, this stock can easily triple in price. 
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0 Comments

Polaris Industries

11/19/2015

0 Comments

 
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​Polaris Industries Inc. designs, engineers, manufactures, and markets off-road vehicles, snowmobiles, motorcycles, and small vehicles primarily in the United States, Canada, Western Europe, Australia, and Mexico. It offers off-road vehicles, such as all-terrain vehicles and side-by-side vehicles for recreational and utility use; snowmobiles consisting of various models, including independent front suspension, long travel rear suspension, hydraulic disc brakes, liquid cooling for brakes, and a three cylinder engine; V-twin cruiser motorcycles; small vehicles, including enclosed on-road quadricycles and light duty commercial vehicles; and technical riding gears for the snowmobile and motorcycle industries. The company also provides replacement parts and accessories consisting of winches, bumper/brushguards, plows, racks, mowers, tires, pull-behinds, cabs, cargo box accessories, tracks, and oil for off-road vehicles; covers, traction products, reverse kits, electric starters, tracks, bags, windshields, oil, and lubricants for snowmobiles; and saddle bags, handlebars, backrests, exhausts, windshields, seats, oil, and various chrome accessories for motorcycles. It sells its products through a network of independent dealers and distributors primarily under the RANGER, RZR, RANGER Crew, Victory Vision, Victory Cross Roads, Cross Country, Indian Chief Classic, Indian Chief Vintage, Indian Chieftain, Roadmaster, Scout, Victory Magnum, and Polaris RUSH names. Further, the company markets recreational apparel, which includes helmets, jackets, bibs and pants, leathers, and hats through dealers and distributors, as well as through sites polaris.com, indianmotorcycle.com, klim.com, kolpin.com, and proarmor.com. Polaris Industries Inc. was founded in 1987 and is headquartered in Medina, Minnesota.
(Summary) (Company) (Chart)
18 November 2015
Price $105.16
1yr Target $139.44
Analysts 18
Dividend $2.12
Payout Ratio 29.98%

1yr Cap Gain 32.59%
Yield 2.01%
1yr Tot Return 34.60%
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EPS (ttm) $7.07
EPS next yr $8.29
EPS next 5yr 15.00%
1yr Potential $124.35
P/E 14.87
PEG 0.99
Beta 1.14
Market Cap $6.89 Bil
Revenues $4.89 Bil
Earnings $480.10 Mil
Profit Margin 9.81%
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1yr EarnGR 11.63%
3yr EarnGR 15.75%
5yr EarnGR 20.22%
1yr DivGR 10.41%
3yr DivGR 12.59%
5yr DivGR 21.52%
Quick Ratio 0.70
Current Ratio 1.40
Debt/Equity 0.34
ROA 22.20%
ROE 54.20%
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One look at the company's fundamentals and another look at the company's chart and you instantly know something doesn't make sense. The fundamentals are telling me that this is an excellent company to own and the chart is telling me this has been a terrible time to own the shares. The company's record results demonstrate the effectiveness of the company's long term strategy and the resiliency of the Polaris organization.

Motorcycle growth has been accelerating, Off Road Vehicle share gains have continued and the company's developing adjacent products have built momentum. All of this was accomplished in the very difficult environment both of weakening currencies and softening economies. This only added to the ongoing pressure from the sluggish oil and agriculture markets, all in the midst of the most competitive powersports environment in a decade.
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So what's happened recently with Polaris Industries?
  • Foreign exchange remained a primary antagonist, as revenue was up 16% on a constant currency basis.
  • Results exceeded consensus estimates, which called for revenue of $1.43 billion and earnings of $2.28 per share.
  • International sales rose just 1% to $153.6 million, but would have climbed 18% excluding currencies.
  • North American retail sales rose 7% year over year
  • The off-road vehicle segment revenue rose 3% to $822.9 million
  • Snowmobiles revenue increased 14% to $185.5 million (up 19% year to date, due to the timing of shipments last quarter to give dealers early access to new premium models).
  • Parts, garments, and accessories rose 3% to $226.3 million.
  • Global adjacent markets (including government/military and work and transportation) rose 10% to $60.8 million.
  • Motorcycle revenue skyrocketed 154% to $160.4 million.
  • Resolved inefficiencies with "consistent enhancements" to Spirit Lake paint system, helping stabilize operations and exceeding shipment goals for the first time in 2015. Further optimizations and upgrades are planned for the next six months.
  • Acquired a paint facility in South Dakota, which will bolster paint capacity later in Q4.

​Looking forward 

Foreign exchange rates are projected to show little, if any, abatement in the next year and currency exchange rates may have actually worsened since Polaris' second quarter earnings report. Analysts now anticipate that currencies will reduce full year 2015 total reported revenue by $150 million to $170 million. This will also reduce gross profit by $75 million to $85 million and reduce pre-tax income by $70 million to $80 million. That's roughly a 7% decrease from earlier projections.

But due to aggressive counter measures in anticipation of the foreign exchange challenge, management has reported that it was able to merely narrow (not reduce) 2015 guidance. Currently it anticipates 2015 revenue to increase 10% to 11% year over year, compared to its previous range of 10% to 12%, while earnings per share are expected to be $7.37 to $7.42, up 11% to 12% and compared to previous guidance for 10% to 12% growth. 

Management has also offered guidance regarding 2016 noting that they are not willing to predict a global recession in the next 15 months, but there is evidence the economy will continue to slow. Management also stated that Polaris intends to continue to lead its core markets by consistently introducing innovative new motorcycle and off-road vehicle models, while at the same time continuing to enhance operational execution. In the end, they expect that the company will be able to continue extending its streak of achieving record quarterly earnings. And over the long term, when these headwinds finally abate, Polaris should emerge stronger than ever.
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My Perspective

Looking at the price chart of the stock in this company it's apparent that the stock has been falling for some time now. In fact, it's lost about a third of its market capitalization just since summer. That fall seems to have taken a company whose stock was obviously overvalued down to a more reasonable level. At a P/E of less than 15 and a PEG below 1, this may just be the best time in years to own this stock. 

If management is correct, and the fundamentals seem to back them up, the cause of this fall can be directly attributed to foreign exchange rather than raw sales. And unfortunately foreign exchange rates may remain at a disadvantage throughout 2016, but that can't last forever. Polaris apparently has the products that consumers seem to continue to want and buy and when that happens, the fundamentals will eventually line up in the right direction. And when the dollar reverses, sales and profits will have the tail wind to push those earning up fast. 

I intend to be entrenched in this stock when the environment changes and profits soar. Since this is an expensive stock I appreciate the fact that this next year may be difficult for this stock and I can therefore accumulate it at a relatively cheap price. Hopefully I'll be able to establish a relatively large position ahead of the move higher. I'll be buying, reinvesting, collecting dividends and hopefully selling options in this stock very soon.   
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0 Comments

GATX

11/17/2015

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GATX Corporation is the largest independent global railcar lessor, owning fleets in North America, Europe and Asia. In addition, the company operates the largest fleet of US-flagged vessels on the Great Lakes and also owns and manages domestic and foreign marine assets and other long-lived, widely-used assets. They also invest in joint ventures that complement their existing business activities. The company is compose of four primary business segments: Rail North America, Rail International, American Steamship Company (“ASC”), and Portfolio Management. 

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​GATX Corporation leases, operates, manages, and remarkets assets in the rail and marine markets in North America and internationally. The company operates in four segments: Rail North America, Rail International, American Steamship Company (ASC), and Portfolio Management. The Rail North America segment primarily leases railcars and locomotive, as well as other ancillary services. This segment also offers repair, maintenance, modification, and regulatory compliance services on the railcar fleet. The Rail International segment leases railcars, as well as offers repair, regulatory compliance, and modernization work for railcars. The ASC segment operates a fleet of vessels that provide waterborne transportation of dry bulk commodities, such as iron ore, coal, limestone aggregates, and metallurgical limestone for steel makers, automobile manufacturing, electricity generation, and non-residential construction markets. The Portfolio Management segment is involved in leasing, asset remarketing, asset management, and marine operations, as well as manages portfolios of assets for third parties. As of December 31, 2014, it operated a fleet of 17 vessels; a fleet of approximately 126,000 cars, including approximately 19,000 boxcars; and a fleet of 585 older four-axle and 18 six-axle locomotives. GATX Corporation was founded in 1898 and is headquartered in Chicago, Illinois.
(Summary) (Company) (Chart)
15 November 2015
Price $44.42
1yr Target $55.80
Analysts 5
Dividend $1.52
Payout Ratio 32.82%

1yr Cap Gain 25.61%
Yield 3.42%
1yr Tot Return 29.03%
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EPS (ttm) $4.63
EPS next yr $5.29
EPS next 5yr 12.00%
1yr Potential $63.48
P/E 9.59
PEG 0.80
Beta 1.22
Market Cap $1.88 Bil
Revenues $1.47 Bil
Earnings $205.60 Mil
Profit Margin 13.94%
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1yr EarnGR 24.79%
3yr EarnGR 23.72%
5yr EarnGR 21.38%
1yr DivGR 6.45%
3yr DivGR 4.35%
5yr DivGR 3.34%
Quick Ratio ---
Current Ratio ---
Debt/Equity 3.39
ROA 3.00%
ROE 16.00%
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​GATX Rail Business

The company's wholly owned fleet of approximately 149,000 railcars is the largest independent railcar lease fleet in the world. With more than a century of rail industry experience, GATX offers its customers leasing, maintenance, asset, financial, and management expertise. The company currently leases tank cars, freight cars, and locomotives in North America, tank cars and freight cars in Europe and freight cars in India. They also have an ownership interest in approximately 2,800 railcars through investments in affiliated companies, and they actively manage approximately 2,200 railcars for other third party owners. GATX utilizes their extensive rail asset knowledge and experience to remarket both wholly owned and managed rail assets. The following table sets forth their worldwide rail fleet data as of December 31, 2014: 

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The company's rail customers primarily operate in the petroleum, chemical, food/agriculture and transportation industries. Their worldwide railcar fleet consists of diverse railcar types that their customers use to ship approximately 600 different types of commodities. The following table provides an overview of the company's railcar types as well as the industries their customers operate in and the commodities they ship. 

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Rail North America
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Rail North America is comprised of the company's wholly owned operations in the United States, Canada, and Mexico. Rail North America primarily provides railcars pursuant to full-service leases under which it maintains the railcars, pays ad valorem taxes and insurance, and provides other ancillary services. These railcars have estimated useful lives of 27 to 42 years and an average age of approximately 19 years. Rail North America has a large and diverse customer base, serving approximately 700 customers. In 2014, no single customer accounted for more than 4% of Rail North America’s total lease revenue, and the top ten customers combined accounted for approximately 20% of Rail North America’s total lease revenue. Rail North America leases new railcars for terms that generally range from five to ten or more years, with renewals of existing leases and assignments generally ranging from three to ten years. The average remaining lease term of the North American fleet was approximately four years as of December 31, 2014.

Rail North America’s primary competitors are Union Tank Car Company, CIT Group Inc., General Electric Railcar Services Corporation, First Union Rail, Trinity Leasing, American Railcar Leasing, The Greenbrier Companies, and The Andersons, Inc. Rail North America competes on the basis of customer relationships, lease rate, maintenance expertise, service capability, and availability of railcars. 

Rail North America purchases new railcars from a number of manufacturers, including Trinity Industries, National Steel Car Ltd., The Greenbrier Companies, and American Railcar Industries, Inc. They also acquire railcars in the secondary market. During 2014, the company acquired more than 18,500 boxcars from General Electric Railcar Services Corporation for approximately $340 million. In 2011, the company entered into an agreement to acquire 12,500 newly built railcars from Trinity Rail Group over a five-year period (as of December 31, 2014, approximately 4,600 railcars remain to be delivered under the agreement). In 2014 the company entered into a long-term supply agreement with Trinity that will take effect in mid-2016, upon the scheduled expiration of the 2011 supply agreement. Under the terms of that agreement, GATX may order up to 8,950 newly built railcars over a four-year period from March, 2016 through March, 2020, the majority of which will be tank cars.

Rail North America also includes a locomotive leasing business, which consisted of 585 older four-axle and 18 six-axle locomotives as of December 31, 2014. Locomotive customers are primarily Class I, regional, and short- line railroads and industrial users. Leases are typically net leases with terms that vary from month-to-month to 15 years. As of December 31, 2014, the average remaining lease term of the locomotive fleet was approximately seven years.

Rail North America’s primary competitors in locomotive leasing are First Union Rail, CIT Group Inc., and Progress Rail Services Corporation. Competitive factors in the market include equipment condition, availability, customer service, and pricing.

Rail North America also selectively remarkets rail assets, including assets managed for third parties and an affiliate. Remarketing activities generate fees and gains which contribute significantly to Rail North America’s segment profit. 

Maintenance

Rail North America operates an extensive network of service facilities in the United States and Canada that perform repair, maintenance, modification and regulatory compliance work on the railcar fleet. The maintenance network is dedicated to performing timely, efficient and high quality repair services in order to keep railcars in service for customers. Maintenance services include interior cleaning of railcars, general repairs to the car body and safety appliances, regulatory compliance work, wheelset replacements, exterior blast and painting, and car stenciling. Rail North America’s maintenance network consists of:
  • Six major service centers that can complete any repair or modification project.
  • Five field repair centers that primarily focus on routine cleaning, repair and regulatory compliance services.
  • Six customer-dedicated sites operating solely within specific customer facilities that offer services tailored to the needs of our customers’ fleets.
  • Twenty mobile units that travel to many track-side field locations to provide spot repairs and interior cleaning services, avoiding the need to shop a railcar.

The maintenance network is supplemented by a number of preferred third party service centers. In 2014, third party service centers accounted for approximately 43% of Rail North America’s service center maintenance costs (excluding the cost of repairs performed by railroads).

The company's maintenance activities are substantially dedicated to servicing their wholly owned railcar fleet pursuant to the provisions of their lease contracts. Additionally, their customers periodically require services that are not included in the full-service lease agreement, such as repair of railcar damage.

Rail International

Rail International is comprised of the company's wholly owned European operations (“GATX Rail Europe” or “GRE”) and a recently established railcar leasing business in India (“Rail India”), as well as one development stage affiliate in China. GRE leases railcars to customers throughout Europe pursuant to full-service leases under which it maintains the railcars and provides insurance and other ancillary services. These railcars have estimated useful lives of 25 to 35 years and an average age of approximately 19 years.

GRE has a diverse customer base with approximately 250 customers. In 2014, two customers each accounted for more than 10% of GRE’s total lease revenue and the top ten customers combined accounted for approximately 64% of GRE’s total lease revenue. GRE’s lease terms generally range from one to ten years and at December 31, 2014, the average remaining lease term of the European fleet was approximately two years.

GRE competes principally on the basis of customer relationships, lease rate, maintenance expertise, service capacity, and availability of railcars. Its primary competitors are VTG Aktiengesellschaft, the Ermewa Group, and Nacco, a subsidiary of CIT Group Inc.

GRE acquires new railcars primarily from Astra Rail Industries S.R.L. and Feldbinder Spezialfahrzeugwerke GmBH. Additionally, GRE’s Ostróda, Poland maintenance facility assembles several hundred tank cars each year. As of December 31, 2014, GRE has commitments to acquire approximately 1,000 newly manufactured railcars to be delivered in 2015.

Rail India began operations in 2012 and was the first leasing company registered under the Indian Railways Wagon Leasing Scheme. In 2014, Rail India focused on pursuing investment opportunities in new and existing flat wagons, and developing relationships with customers, suppliers and the Indian Railways. In 2015, Rail India expects to continue to pursue investment opportunities and grow its fleet of wagons.

Maintenance

GRE operates service centers in Hannover, Germany and Ostróda, Poland that perform significant repairs, regulatory compliance and modernization work for owned railcars. These service centers are supplemented by a number of third party repair facilities, which in 2014 accounted for approximately 39% of GRE’s fleet repair costs.

In India, all railcar maintenance is performed by the Indian Railways or a third party service provider retained by the Indian Railways.

Similar to our Rail North America segment, customers periodically require repair services that are not included in the full-service lease agreement. For GRE, these services are generally related to the repair of damages by customers and railways.

American Steamship Company
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ASC operates the largest fleet of US flagged vessels on the Great Lakes and strives to attain the highest levels of delivery efficiency, safety and environmental responsibility. ASC provides waterborne transportation of dry bulk commodities such as iron ore, coal, limestone aggregates and metallurgical limestone, which serve end markets that include steel makers, domestic automobile manufacturing, electricity generation and non-residential construction. ASC’s sailing season generally runs from April 1 through December 31; however, depending on customer demand and weather conditions, certain vessels may commence operations during March and continue to operate into January of the following year.

At December 31, 2014, ASC’s fleet consisted of 17 vessels with a net book value of $231.0 million and $11.7 million of off balance sheet assets. Fourteen of the vessels are diesel powered, have an average age of 37 years, and estimated useful lives of 65 years. Two steam powered vessels were built in the 1940s and 1950s and have estimated remaining useful lives of five years. The other vessel in ASC’s fleet is a diesel powered articulated tug barge, which is leased by ASC under an operating lease that expires in 2017. Sixteen of ASC’s vessels are generally available for both service contract and spot business and the remaining vessel has dedicated service pursuant to a time charter agreement that is scheduled to expire following the 2015 sailing season.

​ASC’s vessels operate exclusively in the fresh water of the Great Lakes and as a result, with proper maintenance and periodic refurbishment, may achieve extended service well beyond the useful life estimates. 

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All of ASC’s vessels are equipped with self-unloading equipment, enabling them to discharge dry bulk cargo without assistance from shore side equipment or personnel. This equipment enables the vessels to operate twenty-four hours a day, seven days a week. ASC’s vessels are capable of transporting and unloading almost any free flowing, dry bulk commodity. In 2014, ASC served 29 customers with the top five customers comprising 79% of total revenue.
 
ASC’s vessels operate pursuant to customer contracts that stipulate freight volume and may also be supplemented with additional spot volume opportunities. In 2014, ASC operated 15 vessels and carried 30.5 million net tons of cargo. The number of vessels deployed by ASC in any given year is dependent on customer volume requirements.

​ASC’s primary competitors on the Great Lakes are Interlake Steamship Company, Great Lakes Fleet, Inc., Grand River Navigation, Central Marine Logistics, and VanEnkevort Tug and Barge. ASC principally competes on the basis of service capabilities, customer relationships and price.
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Portfolio Management

Portfolio Management generates leasing, marine operating, asset remarketing and management fee income through a collection of diversified wholly owned assets and joint venture investments. 

Portfolio Management’s wholly owned portfolio consists of assets subject to operating and finance leases, marine assets operating in pooling arrangements and secured loans. Leased assets primarily include inland marine equipment. Pooled marine assets include multi-gas vessels, chemical parcel tankers and inland barges. Owned assets have estimated useful lives of 5 to 30 years and are either placed with customers pursuant to operating or finance leases, which have scheduled expirations ranging from 2015 to 2027, or in the case of cer- tain marine assets, are operated by a service provider under contractual pooling agreements. Portfolio Management remarkets these assets, generating portfolio proceeds and gains on asset dispositions.

Portfolio Management also manages portfolios of assets for third parties which generate fee and residual sharing income through portfolio administration and remarketing of these assets. Portfolio Management’s investments in affiliated companies primarily include aircraft engine leasing and shipping operations. Portfolio Management’s joint venture partners are typically well-established companies with extensive experience in their respective markets. 

My Thoughts

This is an excellent company in a business (Railroads) that really interests me. I think this will be an excellent addition to my portfolio but before I add shares to this company I'll need to compare this company's fundamentals against Trinity and Greenbrier. I recently wrote and article comparing those two companies so comparing them to GATX should be an easy exercise. One or more of these companies will surely end up in my accounts.
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0 Comments

Actionable Advice

11/15/2015

0 Comments

 
The advantage of documenting my research and publishing it on this website has been the availability of actionable advice. I've always used this site to pull together and put in one place all the information I need from multiple sources to make decisions on buying and selling both securities and options. I've also used this site to document a company's stock at a specific moment in time so that I can compare that information, as well as my assessment, at some future time. It's simply this ability to see specific information, and my assessment of that information, at different time periods that improves my stock trading. I have found this to be an easy and successful way to improve my investing. 
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As I've mentioned before I actually invest based upon the information found in these articles. For the most part, the fundamental and technical research is done first, documented second, and the actual investing is done later as funds become available. I've never done it the other way around and I've never done it to pull investors in after I've already invested. I find that to be unethical but I know others do that everyday on Wall Street. 

One of the keys to my assessments has been the use of both fundamental and technical information. I use the fundamentals to determine specifically which company I'm interested in investing in. That's critical because a good investment can only be made if the underlying company is a great company. But I never seem to find those great companies at the optimum time. That's where technical analysis has always helped me. Technical information is all about timing and the secrets there for me are the momentum indicators. But in order to understand momentum indicators and investor needs to study them thoroughly to understand them completely. In time they become intuitive and obvious. It's been one of the biggest edges I've had in the ability to successfully invest.

I intend to continue this process for at least a while longer because it's been so successful for me. If it's helped anyone else, then all the better. But I realize everyone is different, and that's what makes a market. If you're struggling as an investor as I once was, I found that documenting my thought processes was the first step on developing my own strategies and tactics. I wish every investor out there the best. And I hope you visit often. 
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0 Comments

Aceto

11/12/2015

0 Comments

 
Aceto Corporation is a global leader in the marketing, sale and distribution of products for Human Health (finished dosage form generics and nutraceutical products - 24%), Pharmaceutical Ingredients (pharmaceutical intermediates and active pharmaceutical ingredients - 36%) and Performance Chemicals (specialty chemicals and agricultural protection products - 40%). With business operations in nine countries, Aceto Corp distributes over 1,100 chemical compounds used principally as finished products or raw materials in the pharmaceutical, nutraceutical, agricultural, coatings and industrial chemical industries. Aceto’s global operations, including a staff of 26 in China and 12 in India, are distinctive in the industry and enable its worldwide sourcing and regulatory capabilities. The company sources approximately 70% of their products from Asia, buying from approximately 500 companies in China and approximately 200 companies in India. 
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​Aceto Corporation sources, markets, sells, and distributes pharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protection products, and specialty chemicals. The company operates in three segments: Human Health, Pharmaceutical Ingredients, and Performance Chemicals. The Human Health segment supplies raw materials used in the production of nutritional and packaged dietary supplements, including vitamins, amino acids, iron compounds, and bio chemicals used in pharmaceutical and nutritional preparations. It markets and distributes its generic prescription and over the counter pharmaceutical products to wholesalers, chain drug stores, distributors, and mass market merchandisers. The Pharmaceutical Ingredients segment offers active pharmaceutical ingredients and pharmaceutical intermediates to various generic drug companies. The Performance Chemicals segment provides specialty chemicals, such as antioxidants, photo initiators, catalysts, curatives, brighteners, and adhesion promoters, which make plastics, surface coatings, textiles, fuels, and lubricants; diazos and couplers used in microfilms and blueprints, as well as in the photo tooling of printed circuit boards; and organic intermediates and colorants. Its raw materials are also used in electronic parts and binders. This segment also offers agricultural protection products comprising herbicides, fungicides, and insecticides, which control weed growth and the spread of insects and microorganisms; and sprout inhibitors for potatoes. The company serves various companies in the industrial chemical, agricultural, and human health and pharmaceutical industries primarily in the United States, Europe, and Asia. Aceto Corporation was founded in 1947 and is headquartered in Port Washington, New York.
(Summary) (Company) (Chart)
11 November 2015
Price $25.19
1yr Target $34.50
Analysts 2
Dividend $0.24
Payout Ratio 18.60%

1yr Cap Gain 36.95%
Yield 0.95%
1yr Tot Return 37.90%
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EPS (ttm) $1.29
EPS next yr $1.73
EPS next 5yr 20.00%
1yr Potential $34.60
P/E 19.81
PEG 0.99
Beta 1.32
Market Cap $753.72Mil
Revenues $549.60 Mil
Earnings $38.00 Mil
Profit Margin 6.79%
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1yr EarnGR 11.76%
3yr EarnGR 21.61%
5yr EarnGR 34.39%
1yr DivGR 0.00%
3yr DivGR 6.20%
5yr DivGR 3.71%
Quick Ratio 2.10
Current Ratio 2.90
Debt/Equity 0.42
ROA 7.80%
ROE 15.20%
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Company Performance

The Company’s performance for fiscal 2015 continued a six year trend in the growth of sales, gross profit, operating income, EBITDA, net income and earnings per share (EBITDA increased by 19% and EPS increased by 12%, on a 7% increase in sales). The chart below illustrates the positive financial trends that resulted from the implementation of a shift in the company's strategy toward becoming a human health oriented Company. The company's emphasis on quality assurance, regulatory compliance, product logistics and sourcing has provided the foundation for the company's success in expanding their footprint into the pharmaceutical industry as a supplier of molecules and finished dosage form generic prescription drugs (Rx) under the RISING brand. 
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Acquired in April 2014, PACK Pharmaceuticals is now completely integrated into the company's Rising Pharmaceuticals business. PACK was a well-run operation and get well into the Rising Pharmaceuticals organization from the product, market and financial perspectives. As a result, the Human Health segment showed a 41% increase in revenue and a 56% increase in gross profit in fiscal 2015.

The Pharmaceutical Ingredients business saw a decrease in sales of its previously launched and very successful, high-margin active pharmaceutical ingredient. That product reached a commercial steady state negatively impacting the segment’s year-to-year comparative performance. The company has, however, robust product development efforts and expects modest growth going forward.

The Performance Chemicals segment's sales were essentially flat yet gross profits increased by 12%. This result is indicative of the efforts the company began the previous year to improve product mix and pricing and focus on more lucrative opportunities. 

The major growth driver for the company's overall business remains the finished dosage form generic drug business segment. The pipeline of products is at 107 at fiscal year-end, with three products approved and awaiting launch, 57 applications filed with the FDA and in the queue awaiting action and 47 products in various stages of active development. In addition, the business development team has in excess of 30 projects that are under active consideration. As of year-end fiscal 2015, 29 applications have been at the FDA for more than two years, of which 13 have been with the FDA for over 36 months. 


Fiscal 2015 Finances  

In fiscal 2015 the company achieved record full-year results for net sales, gross profit, net income and earnings per share. Net sales were $547.0 million, a 7.2% increase from the $510.2 million reported for fiscal year 2014. On a constant currency basis, net sales increased by 10.1% in the year. Gross profit for the year was $135.4 million, an increase of 18.1% from $114.7 million in fiscal 2014. Net income increased by 15.5% to $33.5 million from $29.0 million reported in fiscal 2014. Earnings per diluted share were $1.14 for fiscal 2015, compared to $1.02 per share in fiscal 2014, an 11.8% increase.

On a non-GAAP basis, ACETO’s net income was $38.9 million, or $1.33 per share, compared to $34.7 million, or $1.22 per share, as reported for fiscal 2014, increases of 12.0% and 9.0%, respectively. The Company ended fiscal 2015 with $37.4 million in cash, cash equivalents and short term investments, bank debt of $110.2 million, working capital of $185.3 million, and shareholders’ equity of $254.2 million. 

My Perspective

This looks like it could be an excellent addition to my portfolio. This company doesn't have a consistently growing dividend because they seem to raise the dividend every couple of years rather than annually. So this stock is not going to be on any DGI watch list. This company also has a market capitalization below one billion, so it's not going to be on many of those large capitalization investor's lists either. It's also followed by two analysts. And at times, those can be good attributes.

Based on the company's fundamentals Aceto Corp may appear to be priced appropriately. But look a little closer and you'll see that the company's future looks pretty good. This company is estimated to produce a return on investment of over 36% during the next year. And the reason is simple to see. Just look at the stock chart and any investor will see that the pullback in this company's stock price may have provided an excellent opportunity to load up on these shares at a bargain price.

I plan to start a position in this company very soon (probably this week) and then add to that position over time through dividend reinvestment from this and other companies and through the selling of options on this security. This stock looks promising at this price level.  
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0 Comments

Scripps Network Interactive

11/10/2015

0 Comments

 
Scripps Networks Interactive is an American media company formed on July 1, 2008, when the E. W. Scripps Company spun off its cable television division as a publicly traded company. Since launching HGTV in 1994, Scripps Networks diversified into lifestyle media, developing relevant content for television, Internet, satellite radio, books, magazines, and on emerging media platforms. In addition to HGTV, its lifestyle media brands include Food Network, DIY Network, Cooking Channel, Travel Channel, Great American Country and ulive.
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​Scripps Networks Interactive, Inc. develops lifestyle-oriented content for linear and interactive video platforms in the United States, the United Kingdom and other European markets, the Middle East and Africa, the Asia-Pacific, and Latin America. The company delivers content that focuses on specifically defined topics of interest for audiences and advertisers. It operates national television networks, including Home and Garden Television (HGTV), Food Network, Travel Channel, DIY Network, Cooking Channel, and Great American Country; and Websites comprising HGTV.com, FoodNetwork.com, TravelChannel.com, DIYNetwork.com, CookingChanneltv.com, and GACTV.com that are associated with the aforementioned television brands and other Internet-based businesses serving home, food, and travel related categories. The company also licenses its content to third parties; and brands for consumer products, such as videos, books, kitchenware, and tools. Scripps Networks Interactive, Inc. is headquartered in Knoxville, Tennessee.
​(Summary) (Company) (Chart)
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8 November 2015
Price $59.04
1yr Target $63.68
Analysts 19
Dividend $0.92
Payout Ratio 21.29%

1yr Cap Gain 7.85%
Yield 1.55%
1yr Tot Return 9.40%
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EPS (ttm) $4.32
EPS next yr $4.84
EPS next 5yr 9.90%
1yr Potential $47.91
P/E 13.67
PEG 1.38
Beta 1.30
Market Cap $7.59 Bil
Revenues $2.70 Bil
Earnings $580.70 Mil
Profit Margin 21.48%
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1yr EarnGR 12.64%
3yr EarnGR 15.26%
5yr EarnGR 16.17%
1yr DivGR 33.33%
3yr DivGR 28.40%
5yr DivGR 21.67%
Quick Ratio 10.50
Current Ratio 10.50
Debt/Equity 2.49
ROA 12.70%
ROE 41.30%
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​The Company

​Scripps Networks Interactive began in 1993 when the E. W. Scripps Company announced it would launch a 24-hour cable network in the fall of 1994. On December 30, 1994 HGTV went on the air to 6.5 million homes in 50 markets.

In 1995, the official opening for HGTV’s new headquarters in Knoxville took place. The network reached into 10 million homes on November 1 of that year, launched in Canada and online with HGTV.com in 1996, and hit the 25 million subscriber mark in 1997.

Also in 1997, Scripps Networks added its second network with the acquisition of Food Network. The year also saw HGTV execute its first HGTV Dream Home Giveaway, which received more than 1.2 million entries from across the country. By 2011, the number of entries had grown to nearly 80 million.

In 1999 Scripps launched DIY Network. With three brands now under the Scripps Networks umbrella, a $12 million addition was made to the company’s headquarters in Knoxville to provide the infrastructure and technology to support the networks’ growth.

Both HGTV (in November 2002) and Food Network (in September 2003) reached 80 million subscribers each, while Food Network followed HGTV’s footprint into Canada by launching Food Network Canada at the end of 2002.
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The first half of the decade also saw Scripps Networks add its fourth and fifth networks to its mix, Fine Living Network (2002) and Great American Country (2004). A few months after the acquisition of Great American Country, Scripps Networks announced the move of the network’s headquarters from Denver, Colorado to Nashville, Tennessee.

In 2008, Scripps Networks Interactive split from the E.W. Scripps Company and received its own listing on the NYSE as ticker symbol SNI. The year also saw Great American Country reach 50 million subscribers, with DIY Network reaching the 50 million subscriber mark in 2009.

Scripps Networks acquired a majority interest in the Travel Channel from Cox Communications for a reported $975 million in late 2009, and the following year rebranded Fine Living Network as Cooking Channel. In April 2011, Scripps announced the sale of Shopzilla to Symphony Technology Group for $165 million. Scripps, from within its Travel Channel unit also invested in Oyster.com, a hotel research and booking site.

On August 15, 2011, Virgin Media agreed to sell its 50% stake in UKTV to Scripps Networks in a deal worth £339m. Scripps paid £239m in cash, and about £100m to acquire the outstanding preferred stock and debt owed by UKTV to Virgin Media. Completion of the transaction was contingent on regulatory approvals in Ireland and Jersey, which it received on October 3, 2011. 

On March 22, 2012, Scripps Networks announced that it had agreed to pay £65m (US$102.7m) to acquire Travel Channel International Limited, the UK-based distributor of the Travel Channel brand across the Europe, Middle East, Africa and Asia Pacific markets. The deal was completed on May 1, 2012 following regulatory approval. The international channel will be integrated with Scripps Networks' own Travel Channel.

On December 11, 2012 One Kings Lane, a home decor website, announced that Scripps Networks had invested in its Series D financing. Scripps Networks invested $15M in exchange for a 3% equity stake in the company.

On June 5, 2013, Scripps Networks launched ulive, a digital-only lifestyle video brand that combines video content from Scripps Networks’ media brands with premium third-party videos and original series. Consisting of ulive.com, this premium video portal and distribution network expands on Scripps Networks’ food, home and travel verticals, adding coverage for topics including parenting and wellness.

Scripps Networks has launched Food Network in the United Kingdom and other European markets as well as in the Middle East and Africa. The company recently acquired a 50 percent interest in UKTV, one of the U.K. leading multi-channel television programming companies. Scripps Networks is also is preparing to launch Food Network in Indonesia, bringing the channel to five countries in Asia in one year’s time. Scripps Networks' channels are also available through outlets on U.S. military bases and U.S. embassies around the world via the American Forces Network.
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In May 2013, the company announced that it will open a Brazilian headquarters, in São Paulo, and has appointed the former vice-president of strategy of FOX as managing director. Scripps Networks will broadcast its channels to the entire Latin America region.
On 2 July 2015 SNI finalized acquisiton of 100% stake in N-Vision company which has 52.7% stake in Polish television group TVN. TVN group broadcasts 12 channels in Poland, including: TVN, TVN 24 and TVN 24 Biznes i Świat.
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My Perspective

​For those individuals that have read several of the articles included in this website, you already know I'm always interested in entertainment companies. I really believe that entertainment will capture more and more of the average Americans budget in the years ahead. Any company creating and producing entertainment will benefit from this trend. I'm already an owner of shares of many of the companies in this industry and Scripps Network Interactive is simply another one of these companies. 

I'm also interested in companies that grow their dividends over time. Scripps Network Interactive is one of those companies too. Looking at the growth rates above and seeing that the earnings growth rates are in the upper 20s and the dividend growth rates are in the upper teens make me very interested in this company. In fact, I like all of the fundamentals above. They're the kind of numbers I look for when investing any company. 

Unfortunately it appears that the best time to have bought the stock what about a month ago when it fell below $50 per share. The fundamentals would have been the same but the one year return on investment would have been in the mid to upper 20%. I know that sounds like advice after the fact, but at it's current price of $59 I would simply have to wait for another pullback. 

I intend to start a position in this company if and when it pulls back into the $50-$53 range. I already know this is a great company to own but I need to own it at a great price too. And right now $59 is just too high for me.

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0 Comments

Auto Dealerships

11/5/2015

0 Comments

 
As the number of Automotive Dealerships continue to consolidate across the United States, I thought it was time to look at two of the largest and compare their fundamentals to see if either were possible candidates for accumulation. Below you'll find information on Lithia Motors of Medford, Oregon, and Group 1 Automotive of Houston, Texas. 

As you can imagine, these companies aren't hard to understand. They both sell a variety of cars at multiple locations throughout the United States. They both provide financing for new and used autos and perform maintenance, service and repair on most vehicles. In fact, if you've ever been to a dealership and bought a car,  you pretty much already understand the business. 

To assess whether I'm interested in investing in either of these companies, all I need to do is review their fundamentals. And then review the charts for timing.
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Lithia Motors, Inc. operates as an automotive franchisee and retailer of new and used vehicles in the United States. The company sells new and used cars, and replacement parts; provides vehicle maintenance, warranty, paint, and repair services; and offers related financing; and sells service contracts, vehicle protection products, and credit insurance products. As of March 2, 2015, it offered 30 brands of new vehicles and various brands of used vehicles in 130 stores; and online through Lithia.com and DCHauto.com. The company was founded in 1946 and is headquartered in Medford, Oregon.
​(Summary) (Company) (Chart)
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​The Company

Lithia Motors, Inc. is a nationwide automotive dealership network headquartered in Medford, Oregon. It is the seventh largest automotive retailer in the United States. 

Lithia Motors began in 1946 when Walt DeBoer opened a single car dealership in Ashland, Oregon. The first year the five person company sold 14 cars. In 1968 Walt DeBoer died and his son Sidney DeBoer took over the company. Sidney reorganized the business and in 1970 purchased a Dodge dealership in Medford. Lithia’s base of operation was then moved to Medford and the company grew to a total of five stores with 19 franchises by 1990.

In December 1996 the company went public, trading on the New York Stock Exchange with an IPO of $11 per share. By 2003, Lithia had revenues of $2.5 billion from its 84 dealerships and by 2005 the company increased the number of dealerships to 88. In early 2007 the company began plans to build a 60-acre auto mall north of downtown Medford and to build a new corporate headquarters in downtown Medford. In January, 2014 the Commons building was awarded Silver Leadership in Energy and Environmental Design (LEED) Certification by the U.S. Green Building Council.

As of January, 2014, Lithia operated 92 stores in 13 states, but with the acquisition of the DCH auto group in 2015, Lithia now operates 129 stores in 14 states.
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Group 1 Automotive, Inc. operates in the automotive retail industry. It sells new and used cars, light trucks, and vehicle parts; arranges vehicle financing; sells service and insurance contracts; and provides automotive maintenance and repair services. The company has operations primarily in the metropolitan areas of Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, Oklahoma, South Carolina, and Texas in the United States; 16 towns in the United Kingdom; and in metropolitan markets of Sao Paulo, Parana, and Mato Grosso do Sul, Brazil. As of September 28, 2015, it owned and operated 153 automotive dealerships, 200 franchises, and 35 collision centers that offer 32 brands of automobiles. The company was founded in 1995 and is headquartered in Houston, Texas.
​(Summary) (Company) (Chart)
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​The Company

Group 1 Automotive, Inc. was founded in 1995 and went public in 1997. It has its headquarters in the One Memorial City Plaza building in the Memorial City district of Houston, Texas. As of 2013, Group 1 is the third largest automotive retailer in the United States and as of 2014 the company owns 116 dealerships in 15 states, 17 in Brazil and 17 in the UK. The company is led by the former Ford Motor Company executive, Earl J. Hesterberg.

Group 1's chairman, president, and chief executive officer, B.B. (Ben) Hollingsworth, Jr., was the one with Wall Street experience among the men who founded the company in 1995. The seeds of Group 1 were planted when Hollingsworth was invited by Houston automobile dealers Sterling McCall and Charles Smith to meet at The Forest Club in West Houston. The two men wanted to discuss a dealership roll-up and sought advice from Hollingsworth about the implications of taking such a venture public.

The two executives possessed a wealth of experience in the car business. Smith's family had been involved in automotive retailing since 1917 and Charles Smith had more than a quarter-century of experience himself. The family's group of Texas dealerships generated revenues of more than $200 million. McCall had a similar level of experience; he was the first to be granted a stand-alone exclusive Toyota dealership in Houston. The three men agreed to go into business together and in December 1995 formed Group 1 Automotive, Inc. to acquire automobile dealerships and their related operations.
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Data as of 4 November
Lithia Motors
Price $120.61
1yr Target $129.38
Analysts 8
Dividend $0.80
Payout Ratio 12.63%

1yr Cap Gain 7.27%
Yield 0.66%
1yr Tot Return 7.93%

EPS (ttm) $6.33
EPS next yr $7.61
EPS next 5yr 25.00%
1yr Potential $190.25
P/E 19.05
PEG 0.76
Beta 1.93
Market Cap $3.17 Bil
Revenues $6.88 Bil
Earnings $167.60 Mil
Profit Margin 2.42%

1yr EarnGR 29.87%
3yr EarnGR 33.95%
5yr EarnGR 66.58%
1yr DivGR 23.07%
3yr DivGR 31.36%
5yr DivGR ---
Quick Ratio 0.20
Current Ratio 1.10
Debt/Equity 2.46
ROA 6.30%
ROE 24.30%
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Group 1 Automotive
Price $87.85
1yr Target $103.38
Analysts 8
Dividend $0.84
Payout Ratio 13.74%

1yr Cap Gain 17.67%
Yield 0.95%
1yr Tot Return 18.62%

EPS (ttm) $6.11
EPS next yr $8.07
EPS next 5yr 17.40%
1yr Potential $140.41
P/E 14.38
PEG 0.83
Beta 1.26
Market Cap $2.12 Bil
Revenues $10.50 Bil
Earnings $142.20 Mil
Profit Margin 9.46%

1yr EarnGR -16.67%
3yr EarnGR 1.22%
5yr EarnGR 20.27%
1yr DivGR 7.69%
3yr DivGR 13.25%
5yr DivGR ---
Quick Ratio 0.20
Current Ratio 1.00
Debt/Equity 2.56
ROA 3.40%
ROE 14.50%
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​My Thoughts

Two of the biggest purchases any American will make in their lifetime are a house and a car. So looking at the companies that are consolidating one of those industries is something every investor should at least consider. In addition, once consolidation in an industry begins, it usually continues for a number of years with the larger consolidations growing larger and richer and the smaller companies disappearing. Knowing that, I think it's important to get in on the activity early. 

Either one of these companies look like a great long term investment but it would be wise for any investor to watch this type of investment to ensure that the company they own remains one of the dominant players rather than one that disappears. I believe these two are going to survive and grow even larger. 

I need to do more research on these companies but I believe very shortly I will add one or both of these companies to my portfolio. 
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0 Comments

Compass Minerals

11/2/2015

0 Comments

 
Compass Minerals is a leading producer of minerals, including salt, magnesium chloride, sulfate of potash and other plant nutrition products. Based in the Kansas City metropolitan area, the company provides bulk treated and untreated highway deicing salt to customers in North America and the United Kingdom and plant nutrition products to growers worldwide. Compass Minerals also produces consumer deicing and water conditioning products, consumer and commercial culinary salt, and other mineral-based products for consumer, agricultural, and industrial applications. In addition, Compass Minerals provides records management services to businesses throughout the United Kingdom.
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​Compass Minerals International, Inc. produces and markets salt, sulfate of potash specialty fertilizer (SOP), plant micronutrients, and magnesium chloride primarily in North America and the United Kingdom. Its Salt segment mines, produces, processes, distributes, and markets sodium chloride and magnesium chloride for use in highway and consumer deicing, dust control, water conditioning, consumer and industrial food preparation, and agricultural and industrial applications; and purchases potassium chloride and calcium chloride to sell as finished products or to blend with sodium chloride to produce specialty products. This segment offers rock salt, mechanically evaporated and solar evaporated salt, and brine and flake magnesium chloride products to producers of intermediate chemical products used in the production of vinyls and other chemicals, and pulp and paper, as well as water treatment and other industrial uses. The company’s Plant Nutrition segment provides SOP, which is used as an ingredient in specialty fertilizer blends for chloride-sensitive crops and turfs under the Protassium+ brand name; and develops and distributes micronutrient products under the Wolf Trax brand. This segment serves growers and fertilizer distributors worldwide. The company also produces and markets consumer deicing and water conditioning products, ingredients used in consumer and commercial food preparation, and other mineral-based products for consumer, agricultural, and industrial applications; and offers records management services to businesses located in the United Kingdom. It operates rock salt mines in Goderich, Ontario, Canada; Cote Blanche, Louisiana, the United States; and Winsford, Cheshire, the United Kingdom. The company was formerly known as Salt Holdings Corporation and changed its name to Compass Minerals International, Inc. in December 2003. Compass Minerals International, Inc. was founded in 1993 and is headquartered in Overland Park, Kansas.
(Summary) (Company) (Chart)
1 November 2015
Price $81.24
1yr Target $88.88
Analysts 8
Dividend $2.64
Payout Ratio 36.82%

1yr Cap Gain 9.40%
Yield 3.24%
1yr Tot Return 12.64%
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EPS (ttm) $7.17
EPS next yr $5.57
EPS next 5yr 17.44%
1yr Potential $97.14
P/E 11.33
PEG 0.65
Beta 0.88
Market Cap $2.74 Bil
Revenues $1.25 Bil
Earnings $240.50 Mil
Profit Margin 19.20%
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1yr EarnGR 65.97%
3yr EarnGR 12.97%
5yr EarnGR 5.53%
1yr DivGR 10.09%
3yr DivGR 9.95%
5yr DivGR 11.06%
Quick Ratio 2.50
Current Ratio 4.10
Debt/Equity 0.96
ROA 15.4%
ROE 37.50%
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The Company
Compass Minerals International encompasses two business segments - Salt and Plant Nutrition. Each business is #1 in the following segments:
  • #1 Salt producer in North America and the United Kingdom
  • #1 Sulfate of potash specialty fertilizer producer in the Western Hemisphere
  • #1 Magnesium chloride deicing/de-dusting producer in North America

Compass Minerals’ Salt Segment mines, produces, processes and distributes sodium chloride and magnesium chloride in North America and the U.K. The segment’s largest business is highway deicing, which primarily sells bulk rock salt to states, provinces, counties, municipalities and road maintenance contractors for ice control on public roadways. The highway deicing product line also includes flake and liquid magnesium chloride used for deicing and dust control; treated rock salt treated for deicing in very low temperatures; and rock salt for the chlor-alkali industry.

The salt segment also includes consumer and industrial product lines, which includes pure sodium chloride and blended products containing magnesium chloride, calcium chloride and potassium chloride for applications such as consumer and professional deicing, water conditioning, culinary salt, animal nutrition, swimming pool minerals, and thousands of industrial applications.

Compass Minerals’ Plant Nutrition Segment produces sulfate of potash fertilizer that provides essential potassium and sulfate crop nutrients and increases the quality and yield of high-value specialty crops such as fruits, vegetables, and tree nuts. SOP also improves the durability of turf grass used in public areas and golf courses.

Compass Minerals also manufactures leading edge, research-proven micronutrient and secondary plant nutrition products under the Wolf Trax® brand. Wolf Trax products include DDP Nutrients and PROTINUS Seed Nutrition.

Wolf Trax DDP Nutrients have been recognized by fertilizer retailers and growers around the world as doing a better job of delivering important micronutrients and secondary nutrients to crops than traditional granular fertilizers.
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DDP Nutrients feature patented technologies such as PlantActiv™ formulation, scientifically designed for improved plant availability, and EvenCoat™ technology, allowing the nutrient to coat dry fertilizer prills. Coating dry fertilizer blends leads to blanket-like distribution of the DDP Nutrients in the field and more feeding sites closer to plant roots.

Many DDP Nutrients can also coat seed, mix with liquid fertilizer or disperse in foliar applications. The Wolf Trax DDP formulation is available for zinc, boron, magnesium, manganese, iron, copper and calcium. PROTINUS Seed Nutrition includes both zinc and manganese for faster, more even emergence and longer, stronger root growth.

Compass Minerals’ domestic sales of SOP are concentrated in the Western and Southeastern U.S. and exports to Latin America, Japan, Australia, and New Zealand.
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​My Perspective

This is another example of the type of company that belongs in my portfolio. Compass Minerals produces products that are constantly in demand and they are #1 in each of their markets. The company has a very nice dividend that is in excess of three percent which is growing at about ten percent per year. The level of its quick and current ratios will also ensure that the dividend can easily be paid in the quarters and years ahead. In addition, it's payout ratio is only about 36% so there's plenty of room for future increases at the current level or even higher.

The company has a low P/E ratio, a low PEG, and a low beta ensuring an excellent possibility for future share price growth with relatively little volatility of an expected upward growth path. Finally, a profit margin in excess of 19% provides a buffer against future competition.

I feel that a company that dates itself all the way back to 1844 understands its markets and is a real solid company. It's the kind of company that represents a solid addition to my portfolio. I'll be starting a position in Compass Minerals in the very near future with the intention of holding on to that company and building up that position for years.
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    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.

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