Updated analysis on some of our long-held positions
Investing isn’t supposed to be exciting. Remember that.
Let’s just run through some updated analysis for some of the stocks in our portfolio.
Lindsay – When you see those big circles of crops from the airplane window seat or when you see them on upclose spraying water over the crops as you drive cross-country, you’re primarily seeing Lindsay’s products. It’s a good business to be in, as there’s secular growth ahead. According to Lindsay’s (LNN) 2013 Annual Report, only 17 per cent of the world’s land is irrigated – yet 40 per cent of the world’s food supply comes from irrigated land. Did you know that Lindsay could be considered a “drone revolution” play? Here’s why. Lindsay specializes in self-propelled center pivot and lateral move irrigation systems. Self-propelled vehicle that delivers water? If that doesn’t fit the definition of a “drone,” I don’t know what would.
The stock isn’t “cheap” but it’s growing double digits on the topline and expanding the bottom line as well as paying a nearly 2% yield. This has been a rather boring stock to hold, but it’s up overall from my cost basis nearly 40% and has paid a steadily increasing dividend since I added it to the portfolio a couple years ago.
Dollar Tree – This company’s current positioning in the market place, with huge investment in retail brick and mortar stores still looks doomed to me. This has been a great short hedge for the broader portfolio, as the stock has been a serial underachiever in this bubble blowing bull market. Carl Icahn has gotten active in Family Dollar and Dollar General has been putting up better numbers than Dollar Tree. I have a soft mental stop-loss above $57 or so, if DLTR were to ever take off.
Calgon Carbon Corporation – The single biggest potential threat and perhaps the only significant threat to CCC’s water purification growth trajectory is the device pictured below:
More seriously, the demand for purified, cleaner water is only going to grow forever and Calgon Carbon is the purest play on that trend, if you’ll excuse the pun. The company should put up better than 10% topline growth this year and next and with expanding margins, I’m modeling out nearly $2 per share in earnings for 2016.
Stratasys – 3-D printing stocks, including this one, are all bubbled up and trading on expectations for continued huge growth in years ahead. There will be many of these 3-D printing stocks to come and go along the way over the next decade, so I’ve tried to find us the best in class. SSYS is trading at more than 30x next year’s consensus earnings and is trading at a whopping 6x next year’s sales estimates. I’m not expecting a huge pop in the stock near-term, but if the company continues to execute, I’ll be in this one for a long time.
Yelp, FUEL, FEYE – Our basket of fallen highflyers has been on fire, with each up nearly 50% now since we added them. I wouldn’t chase any of these names now as they’ve gone vertical off their recent bottoms. The high growth of the revenues at each of these companies didn’t change as their stocks fell 60-70% to give us an opportunity that we took to buy them. The volatility is likely to be rather extreme on the FUEL and FEYE in particular, though Yelp will also be wild to hold. Steady as possible as she goes, so to speak.
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