Two companies high on my list for accumulation in the upcoming year are Corcept Therapeutics and Exelixis. Both companies have strong estimated earnings this year, next year and for the next five years into the future. In addition, they have strong quarter over quarter sales and earnings. Unfortunately on a Price per Earnings basis neither one of these is cheap but with the expected rate of earnings increases, their price suddenly seems reasonable. This can easily be seen by their PEG ratio.
I currently have small positions in both of these companies but I intend to increase those positions significantly over the next few months. I believe both companies will produce a significant return over the next year.
Corcept Therapeutics Incorporated, a pharmaceutical company, discovers, develops, and commercializes drugs for the treatment of severe metabolic, oncologic, and psychiatric disorders in the United States. It offers Korlym (mifepristone) tablets as a once-daily oral medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing syndrome, who have type 2 diabetes mellitus or glucose intolerance, and have failed surgery or are not candidates for surgery. The company is also developing Korlym in combination with eribulin, which is in Phase I/II clinical trial to treat patients with metastatic triple-negative breast cancer; Korlym in combination with drug Abraxane that is in Phase II clinical trial to treat patients with triple-negative breast cancer; and Korlym combined with the androgen deprivation agent enzalutamide, which is in Phase II clinical trial to treat patients with metastatic castration-resistant prostate cancer. In addition, it develops CORT125134 for the treatment of patients with Cushing's syndrome and solid-tumor cancers; and CLIA-validated assay to measure expression of the gene FKBP5, which is stimulated by cortisol activity at glucocorticoid receptor. Corcept Therapeutics Incorporated was founded in 1998 and is headquartered in Menlo Park, California.
Exelixis, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of new medicines with the potential to enhance care and outcomes for people with cancer. The company's products include CABOMETYX for the treatment of patients with advanced renal cell carcinoma, who have received prior anti-angiogenic therapy; and COMETRIQ for the treatment of patients with progressive, metastatic medullary thyroid carcinoma. Its CABOMETYX and COMETRIQ are derived from cabozantinib, an inhibitor of multiple tyrosine kinases, including MET, AXL, and VEGF receptors, which has shown clinical anti-tumor activity in approximately 20 forms of cancer and is the subject of a broad clinical development program. It also offers COTELLIC (cobimetinib), a selective inhibitor of MEK, in combination with vemurafenib for the treatment of patients with BRAF V600E or V600K mutation-positive advanced melanoma in the United States; and in combination with vemurafenib in other territories, including the European Union, Switzerland, Canada, Australia, and Brazil. Exelixis, Inc. has collaboration and license agreements with Ipsen Pharma SAS, Genentech, Inc., GlaxoSmithKline, Bristol-Myers Squibb Company, Sanofi, Merck, and Daiichi Sankyo Company Limited for the development and commercialization of various compounds and programs. The company was formerly known as Exelixis Pharmaceuticals, Inc. and changed its name to Exelixis, Inc. in February 2000. Exelixis, Inc. was founded in 1994 and is headquartered in South San Francisco, California.
Summit Materials is one of the fastest growing construction materials companies in the United States, with a 76% increase in revenue between the year ended Dec 2012 and the year ended Dec 2016, as compared to an average increase of approximately 39% in revenue reported by competitors. Materials include aggregates and cement. Within their markets they offer customers a single-source provider for construction materials and related downstream products through vertical integration. In addition to supplying aggregates to customers they use internally owned materials to produce ready-mix concrete and asphalt paving mix, which is sold externally or used in paving and related service businesses. This vertical integration creates opportunities to increase aggregates volumes, optimize margin at each stage of production and provide customers with efficiency gains, convenience and reliability, which gives the Company a competitive advantage over its competitors.
Summit Materials, Inc., together with its subsidiaries, produces and sells construction materials and related downstream products. Its products include aggregates, cement, ready-mixed concrete, asphalt paving mixes, and concrete products. The company also provides paving and related services to private and public infrastructure sectors. In addition, it operates municipal waste, construction, and demolition debris landfills; and liquid asphalt terminal. The company was founded in 2009 and is headquartered in Denver, Colorado. (Summary) (Company) (Chart)
10 December 2017 Price $32.43 1yr Target $35.34 Analysts 12 Dividend $0.00 Payout Ratio 0.00%
1yr Cap Gain 8.97% Yield 0.00% 1yr Tot Return 8.97%
P/E 47.34 PEG 1.59 Beta ---
EPS (ttm) $0.69 EPS next yr $1.51 Forward P/E 21.43 EPS next 5yr 29.84% 1yr Price Support $45.05
Market Cap $3.48 Bil Revenues $1.87 Bil Earnings $76.30 Mil Profit Margin 4.06%
Quick Ratio 1.90 Current Ratio 2.60 Debt/Equity 1.53
1yr RevGR 13.54% 3yr RevGR --- 5yr RevGR ---
1yr EarnGR 2.58% 3yr EarnGR --- 5yr EarnGR ---
1yr DivGR --- 3yr DivGR --- 5yr DivGR ---
ROA 2.30% ROE 7.30%
Operations and History Since the Company's first acquisition more than seven years ago, Summit Materials has rapidly become a major participant in the U.S. construction materials industry. By volume they are a top 10 aggregates supplier, a top 15 cement producer and a major producer of ready-mix concrete and asphalt paving mix. Revenue in 2016 was $1.6 billion with net income was $46.1 million. The Company's proven and probable aggregates reserves were 2.7 billion tons as of December 31, 2016. In the year ended December 31, 2016 they sold 36.1 million tons of aggregates, 2.4 million tons of cement, 3.8 million cubic yards of ready-mix concrete and 4.4 million tons of asphalt paving mix across our more than 300 sites and plants.
The Company's rapid growth over the last seven years has been due mostly to acquisitions which were funded through equity issuances, debt financings and cash from operations. Over the past decade the Company has witnessed a cyclical decline followed by a slow recovery in the private construction market and nominal growth in public infrastructure spending. However, the U.S. private construction market has grown in recent years. The Company believes they are well positioned to capitalize on any recovery, grow the business and reduce leverage. As of Dec 2016 total indebtedness was approximately $1.5 billion.
The Company anticipates continued growth in their primary end markets, public infrastructure and the private construction market. Public infrastructure, which includes spending by federal, state and local governments for roads, highways, bridges, airports and other public infrastructure projects, has been a relatively stable portion of government budgets providing consistent demand to the industry and is projected by the Portland Cement Association to grow approximately 10% from 2017 to 2021. With the nation’s infrastructure aging, there is increasing momentum to grow federal infrastructure spending among certain legislators and the U.S. President. The Trump administration’s infrastructure stimulus plan is estimated to be close to $1 trillion. The public infrastructure market represented 37% of our revenue in 2016.
The private construction market includes residential and nonresidential new construction and the repair and remodel market. According to the Portland Cement Association, the number of total housing starts in the United States, a leading indicator for our residential business, is expected to grow 29% from 2017 to 2021. In addition, the PCA projects that spending in private nonresidential construction will grow 13% over the same period. The private construction market represented 63% of our revenue in 2016.
In addition to the anticipated growth in our end markets, I expect higher pricing in the core product categories. The PCA estimates that cement consumption will increase approximately 19% from 2017 to 2021, reflecting rising demand in the major end markets. I believe that the increased demand will drive higher cement pricing as production capacity in the United States tightens. The PCA projects consumption will exceed domestic cement capacity by 2019.
Summit Materials operates in 21 U.S. states and in British Columbia, Canada and has assets in 20 U.S. states and in British Columbia, Canada through their platforms that make up the operating segments: West, East, and Cement. The platform businesses in the West and East segments have their own management teams that report to a segment president. The segment presidents, including the cement division president, are responsible for overseeing the operating platforms, developing growth opportunities, implementing best practices and integrating acquired businesses. Acquisitions are an important element of the Company's strategy to enhance value through increased scale and cost savings within local markets.
West Segment: The West segment includes operations in Texas, the Mountain states of Utah, Colorado, Idaho, Wyoming and Nevada and in British Columbia, Canada. Summit Materials supplies aggregates, ready-mix concrete, asphalt paving mix and paving and related services in the West segment. As of December 31, 2016, the West segment controlled approximately 0.8 billion tons of proven and probable aggregates reserves and $459.8 million of net property, plant and equipment and inventories (“hard assets”). During the year ended December 31, 2016, approximately 50% of our revenue and 41% of adjusted EBITDA were generated in the West segment.
East Segment: The East segment serves markets extending across the Midwestern and Eastern United States, most notably in Kansas, Missouri, Virginia, Kentucky, North Carolina, South Carolina and Nebraska where the Company supplies aggregates, ready-mix concrete, asphalt paving mix and paving and related services. As of December 31, 2016, the East segment controlled approximately 1.4 billion tons of proven and probable aggregates reserves and $522.5 million of hard assets. During the year ended December 31, 2016, approximately 33% of revenue and 31% of adjusted EBITDA were generated in the East segment.
Cement Segment: The Cement segment consists of the Hannibal, Missouri and Davenport, Iowa cement plants and 10 distribution terminals along the Mississippi River from Minnesota to Louisiana. These highly efficient plants are complemented by an integrated distribution system that spans the Mississippi River. The Company processes solid and liquid waste into fuel from the plants which reduces the plants’ fuel costs by 50%. The Hannibal, Missouri plant is one of only 12 facilities in the United States that can process both hazardous and non-hazardous solid and liquid waste into fuel. As of December 31, 2016, the Cement segment controlled approximately 0.5 billion tons of proven and probable aggregates reserves, which serve its cement business, and $614.7 million of hard assets. During the year ended December 31, 2016, approximately 17% of revenue and approximately 28% of adjusted EBITDA were generated in the Cement segment.
I.D. Systems produces wireless asset management systems for companies with industrial trucks, rental vehicles, and transportation assets. The Company uses wireless communication technologies - RFID, Wi-Fi, UHF, satellite, and cellular—as well as sensor technology and proprietary software to manage high-value corporate assets, such as forklifts, airport ground support equipment, rental vehicles, dry van trailers, chassis, refrigerated trailers, flatbeds, railcars, and intermodal containers.
The Company's sells hardware, software, maintenance, support, and consulting services. The Company's solutions are divided into three categories: industrial vehicle management, transportation asset management, and rental fleet management.
I.D. Systems, Inc. develops, markets, and sells wireless machine-to-machine solutions in the United States and internationally. The company offers integrated wireless solutions that utilize radio frequency identification, Wi-Fi, satellite or cellular communications, sensor technologies, and software to control, track, monitor, and analyze industrial vehicles, rental vehicles, and transportation assets. It provides industrial and rental fleet asset management products, including on-asset hardware with mounting and user-interface options that provide an autonomous means of asset control and monitoring; wireless asset managers that link the mobile assets being monitored with the customer's computer network or to a remotely hosted server; server software, which manages data communications between the system's database and wireless asset managers or on-asset hardware; and client software. The company also offers transportation asset management products comprising on-asset hardware configurations to address various remote asset types; VeriWise Intelligence Portal, a hosted Website that provides Internet access to client asset information; and a direct data feed through XML or Web services. In addition, it provides hosting, maintenance, and customer support and consulting services, as well as software as a service. The company markets and sells its solutions directly to commercial and government sectors in automotive manufacturing, retail, shipping, freight transportation, heavy industry, wholesale distribution, aerospace and defense, homeland security, and vehicle rental markets, as well as through original equipment manufacturers and industrial equipment dealers. I.D. Systems, Inc. was founded in 1993 and is headquartered in Woodcliff Lake, New Jersey. (Summary) (Company) (Chart)
1 January 2017 Price $6.94 1yr Target $8.20 Analysts 3 Dividend $0.00 Payout Ratio 0.00%
1yr Cap Gain 18.15% Yield 0.00% 1yr Tot Return 18.15%
P/E --- PEG --- Beta 0.05
EPS (ttm) $-0.38 EPS next yr $0.37 Forward P/E 18.76 EPS next 5yr 30.00% 1yr Price Support $11.10
Market Cap $119.23 Mil Revenues $39.00 Mil Earnings $-5.10 Mil Profit Margin ---
Quick Ratio 1.30 Current Ratio 1.50 Debt/Equity 0.00
Vehicle Management Systems.ID Systems' industrial vehicle management systems are used by manufacturers, distributors, retailers, government entities, and other organizations with powered industrial trucks (forklifts, tow tractors, pallet jacks, etc.) to monitor and evaluate fleet operations, track vehicle movement, and manage vehicle operators. The system consists of four elements: a wireless computer installed on the vehicle, wireless communication nodes placed within the facility, system software hosted either on site or in a remote data center, and user software configured in either a client-server or thin-client architecture. Data may be transmitted by any combination of Wi-Fi, cellular or UHF wireless technologies.
The company offers three systems for industrial vehicle management. didBox is a non-wireless system for driver identification. PowerBox™ and PowerFleet® are wireless systems with functions ranging from operator access control, electronic safety checklists, and impact management to location tracking, battery management, maintenance scheduling, and task dispatching.
The company's customers in the industrial vehicle management market include Ford Motor Company,Nestlé North America,Procter & Gamble,Toyota, and Walmart (which accounted for 15% of the company's 2012 revenues).
I.D. Systems provides a variation of its industrial vehicle management system designed specifically for ground support equipment (pushback tractors, baggage tugs, cargo loaders, catering vans, fuel trucks, etc.) and other vehicles that operate in and around airports.
This system, branded AvRamp®, was developed with funding from the U.S. Transportation Security Administration (TSA) and tested by the TSA at Newark Liberty International Airport and the JAXPORT seaport in Jacksonville, Florida. The company's customers in the airport vehicle management market include Envoy Air and American Airlines.
Transportation Asset Management. I.D. Systems' Asset Intelligence subsidiary provides asset management solutions for the freight transportation industry under the VeriWise brand. The VeriWise product line includes a range of telematics solutions for tracking the location and monitoring the condition and status of dry van trailers, refrigerated trailers, flatbeds, chassis, containers, and railcars.
For managing fleets of dry van trailers and containers, the company offers a product called VeriWise Track and Trace for location tracking, a cargo sensor to monitor load status, and a motion sensor to detect trailer movement. The company also offers a temperature sensor to monitor the condition of reefers and an impact sensor to track collisions of railcars.
To manage these transportation assets, VeriWise™ products leverage satellite and cellular communications and web-based data processing technologies. Users access the information about their assets through a remotely hosted website called VeriWise™ Internet Portal (VIP), which generates reports and displays tabular data and a Google map interface. The company's customers in the transportation asset management market include FAB Express, Forward Air, Freymiller,National Retail Systems, and Royal Freight.
Rental Vehicle Management.In 2011, I.D. Systems and Avis Budget Group signed an exclusive agreement to deploy I.D. Systems' wireless vehicle management technology on more than 25,000 Avis Budget vehicles, enabling Avis customers to self-manage their rentals by computer or smartphone. The technology can also automate and expedite the rental and return process, track vehicle mileage, measure fuel consumption, and remotely control a vehicle's door locks.
My Approach to this I.D. Systems
This is a rather small company and one I wouldn't normally invest in. Looking at the company's fundamentals and its stock chart, IDSY suddenly becomes a little more interesting. I realize that sales haven't been trending higher these last few years, but suddenly this year they are. And the stock chart is reflecting that. So there's something going on inside this company that is going to make this a nice investment.
Earnings are also turning positive next year telling me that the company can support a higher valuation than it currently has. In fact, based on its estimated 5 year earning growth these shares could easily move up into double digits next year resulting in a greater than 50% increase in market capitalization. Those are great numbers and the kind that fuel portfolios higher.
I expect to accumulate a small position in this very small company but I'll have to monitor it rather closely. In fact I always monitor my smaller companies closer than normal. They just need extra attention.
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.
DISCLAIMER I am not a licensed investment adviser, and I am not providing investment advise 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.