Vickrey Brown 30 stocks for 2017
Yield at Dec 27 2016: 1) GARP stocks - 1.37%, 2) Dividend - 5.44%, 3) Defensive - 4.57%. Overall yield 3.8%
VickreyBrown 2016 Portfolio published January 17
VickreyBrown Double Dozen 2015
Reprinted with permission.
AMERISAFE Inc. (NasdaqGS: AMSF)
AMERISAFE, Inc. is an insurance holding company that markets and underwrites workers compensation insurance for small to mid-sized U.S. employers engaged in construction, trucking, manufacturing, oil and gas, agriculture, maritime, and logging industries. AMSF has enjoyed a number of recent analyst estimate revisions following strong outperformance in 2014. EPS is expected to grow 16.8% in 2015. The primary catalysts include improved pricing in the company’s core market, steady underwriting results, declining expenses and policy losses and favorable employment trends. In addition to strong and consistent EPS growth, the company offers an attractive valuation at just 13.0X NTM EPS. AMERISAFE, Inc. was incorporated in 1985 and is based in DeRidder, LA.
Applied Materials Inc. (NasdaqGS: AMAT)
Applied Materials, Inc. provides manufacturing equipment, services, and software to manufacturers of semiconductor wafers and chips, flat panel LCDs, solar photovoltaic cells and modules, and other electronic devices. Already the number one producer of machines used in processing silicon wafers, a pending merger with Tokyo Electron in early 2015 is expected to boost the firm’s market share to approximately 32% of wafer-fabrication equipment sales while significantly improving operating leverage. Analysts expect EPS to grow by 22.5% in 2015 on strong wafer-fabrication spending in 2015 as more chipmakers look to reinvest in equipment. The company is also well positioned to benefit from new plant openings by flat-panel display manufacturers. Founded in 1967, AMAT is headquartered in Santa Clara, CA.
Archer-Daniels-Midland Co. (NYSE: ADM)
Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products for use in the food, feed, energy, and industrial products industries. Management continues to focus on strategic acquisitions and divestitures to improve ROIC and reduce earnings volatility. ADM’s latest acquisitions, WILD Flavors and Specialty Commodities, are expected to result in higher margins and more stable, predictable returns in 2015. In addition, the pending sale of its Cocoa processing business for $1.3 billion will see ADM divest of one of its more capital intensive, lower margin business units. Analysts expect EPS to grow 17.3% in 2015 and 18.8% over the next five years. In addition, ADM is expected to increase its dividend payout from 20-30% to 30-40% over the intermediate term. ADM was founded in 1898 and is headquartered in Chicago, IL.
Best Buy Co. (NYSE: BBY)
Best Buy Co., Inc. operates as a multi-national, multi-channel retailer of technology products and appliances in the United States, Canada, China, and Mexico. Investment in the company’s e-commerce platform, a low price matching policy and the push by states to have on-line retailers collect sales taxes have helped BBY grow online sales by over 20% in each of the last two years. The introduction of a stores-within-stores concept – wherein major manufacturers such as Google, Samsung and Microsoft open their own stores within Best Buy locations – has also allowed the company to boost sales and simultaneously reduce the costs of showcasing merchandise. Though the company is valued at just 14.5X NTM earnings, analysts expect EPS to grow by 11.0% in 2015 and 17.8% over the next five years. Best Buy Co., Inc. was founded in 1966 and is headquartered in Richfield, MN.
Cubic Corp. (NYSE: CUB)
Cubic Corporation designs, develops, manufactures, and sells mass transit fare collection systems, air and ground combat training systems, and secure communications products for various federal and regional government agencies in the United States and internationally. While the company’s Transportation Systems segment has provided the majority of growth in recent years, the Defense Systems segment is expected to provide the catalyst in 2015. Defense Systems revenue growth has returned to double-digits while margins are expanding due to cost cutting initiatives. The December 2014 acquisition of defense supplier DTECH LABS, Inc. is also expected to drive revenue and EPS growth going forward, with margins expected in the mid-teens. Analysts expect CUB to grow EPS by 16.9%, supported by a sharp increase in cash flow and rising backlog. Cubic Corp. was founded in 1949 and is headquartered in San Diego, CA.
Dollar General Corp. (NYSE: DG)
Discount retailer Dollar General Corporation sells a wide range of consumer products including paper and cleaning products; packaged and perishable food products; pet supplies and pet food; alcohol and tobacco products; health and beauty products; seasonal products; prepaid phones and accessories; gardening supplies, hardware, and home office supplies; apparel; and home products. As of August 28, 2014, DG operated approximately 11,500 stores in 40 states. The company has faced headwinds in 2014 due to food stamp cuts and constrained growth in mid-to-low end consumer spending. However, EPS is projected to grow 14.3% in 2015 due to lower gasoline prices, which typically boost retails ales. Analysts also believe that DG may benefit from a proposed acquisition of Family Dollar. Dollar General Corporation was founded in 1939 and is based in Goodlettsville, TN.
Douglass Dynamics Inc. (NYSE: PLOW)
Douglas Dynamics, Inc. designs, manufactures, and sells snow and ice control equipment for light trucks in the United States and Canada. Products include salt spreaders, snowplows and related parts and accessories sold to service providers who are contracted to remove snow and ice from commercial, municipal, and residential areas. Due to unusually cold conditions last year, earnings have more than tripled over the trailing twelve months. Analysts have also become increasingly bullish on 2015, with annual EPS expectations climbing 12.5% in the last 60 days. One reason for the optimism may be the company’s acquisition of Henderson Products, Inc., a leading manufacturer of customized, turnkey snow and ice control solutions for heavy-duty trucks focused on state Departments of Transportation (DOT), counties, and municipalities. PLOW also offers a healthy forward dividend yield of 4.0% Douglas Dynamics, Inc. is headquartered in Milwaukee, WI.
Ferro Corp. (NYSE: FOE)
Ferro Corporation is a leading global supplier of technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Over the past two years, FOE has transformed its business from a chemical conglomerate to a higher margin performance materials producer. Important steps taken last year include the acquisition of tile coating manufacturer Vetriceramici S.p.A. and the divestitures of the company’s legacy Polymer Additives and Specialty Plastics businesses. Analysts expect the company to grow earnings 66.0% in 2015 and 25.0% per annum over the next five years. Yet with a forward PE of just 13.3X, FOE currently trades at a significant discount to peers. Ferro Corporation was founded in 1919 and is headquartered in Mayfield Heights, OH.
Global Partners LP (NYSE: GLP)
A publicly traded master limited partnership, Global Partners LP distributes gasoline, distillates, residual oil, renewable fuels, crude oil, natural gas, and propane to wholesalers, retailers, and commercial customers. GLP controls one of the largest terminal networks of refined petroleum products and renewable fuels in the Northeast, and is one of the largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers in New England and New York. With a portfolio of approximately 900 locations primarily in the Northeast, GLP is also one of the largest independent owners, suppliers and operators of gasoline stations and convenience stores. Lower fuel prices typically boost margins for fuel sales due to relatively “stickier” retail prices. GLP has seen 12M analyst EPS estimates rise over 63% over the last 90 days, while earnings are expected to double over the next 12M. Shares are also attractively valued at just 12.7X NTM earnings. Global Partners LP was founded in 2005 and is based in Waltham, MA.
Green Dot Corporation (NYSE: GDOT)
Green Dot Corporation is a technology-centric, “pro-consumer” bank holding company that provides personal banking for the masses. The company offers prepaid debit card products and prepaid card reloading services in the United States, as well as mobile banking services with its GoBank mobile bank account offering. GDOT products are sold through approximately 90,000 retailers, as well as via online and mobile applications. Green Dot is forecasted to grow EPS by 29.9% in 2015 and 20.2% per annum over the next five-years. One of the key growth drivers is expected to be the company’s GoBank low cost checking product. Announced in September 2014, GoBank is offered exclusively at Wal-Mart retail centers across the U.S. Further synergies are expected from cross-selling opportunities following the company’s acquisition of Santa Barbara Tax Products Group (TPG), the nation’s second largest provider of tax refund-related products. GDOT shares are attractively valued at just 11.7X forward EPS. The company was incorporated in 1999 and is headquartered in Pasadena, CA.
HCA Holdings, Inc. (NYSE: HCA)
HCA Holdings, Inc., owns, operates, and manages hospitals; freestanding surgery centers; diagnostic and imaging centers; radiation and oncology therapy centers; rehabilitation and physical therapy centers; psychiatric and various other facilities. HCA is expected to grow EPS at a CAGR of 12.9% over the next five years. One of the main catalysts is the Affordable Care Act, or "Obamacare." The resulting increase in access to the healthcare system is expected to increase profits earned by all healthcare providers. With the largest base of hospitals in the U.S. at approximately 4-5% of the total inpatient care provided across the country, HCA is well positioned to benefit from increasing access to the healthcare system. In addition to its high growth potential, HCA also currently carries a modest valuation at just 14.6X NTM earnings. The company was founded in 1968 and is headquartered in Nashville, TN.
International Flavors and Fragrances, Inc. (NYSE: IFF)
International Flavors & Fragrances, Inc. creates, manufactures, and supplies flavors and fragrances for use in various consumer products worldwide. Consumers experience these unique scents and tastes in fine fragrances and beauty care, detergents and household goods, as well as beverages, sweet goods and food products. Emerging markets are expected to contribute significantly to International Flavors’ revenues and earnings, as overseas population growth and wealth creation continues to spur demand for the company’s products. Analysts expect the company grow EPS at 10.6% per year over the next five years. IFF is also expected to continue its streak of dividend increases. Over the last five years, IFF has increased its annual dividend payout from $1.00 per share to $1.88 per share, including an increase of 20.5% in 4Q 2014. IFF was founded in 1833 and is headquartered in New York, NY.
Las Vegas Sands Corp. (NYSE: LVS)
Las Vegas Sands Corp. develops, owns, and operates integrated resorts in Asia and the United States. The company’s integrated resort facilities include accommodations, gaming, entertainment and retail facilities, convention and exhibition facilities, celebrity chef restaurants, and other amenities. Despite recent gambling revenue headwinds in Macau, LVS is still expected to grow EPS by 5.1% in 2015 and 13.5% per annum over the next five years. Diversification is one reason for the firm’s relative resilience, with approximately 21% of revenues coming from hotel rooms, food and beverage, mall operations and convention business. In addition, the company offers an attractive forward dividend yield of 3.7% while trading nearly 20% below its historical three-year forward PE. LVS was founded in 1988 and is based in Las Vegas, NV.
Leidos Holdings Inc. (NYSE: LDOS)
Leidos Holdings, Inc. is a science and technology solutions leader working to address some of the world's toughest challenges in national security, health and engineering. A strategic decision to exit non-core markets and cut costs helped the company double EPS over the TTM. Analysts are also expecting double-digit growth in EPS over the next 12 months. In addition, the company is expected to return significant cash to shareholders in 2015, with sufficient room left under its current buyback program to reduce outstanding shares by up to 11% while also offering a 3.0% forward dividend yield. Leidos Holdings, Inc. was founded in 1969 and is headquartered in Reston, VA.
The Navigators Group Inc. (NYSE: NAVG)
The Navigators Group, Inc. is an international specialty insurance holding company that underwrites ocean marine, property and casualty, professional liability, and specialty insurance products and services. NAVG distributes its products through global, national, and regional retail and wholesale insurance brokers. Solid underwriting, continued premium growth, and improvements in the combined ratio have allowed the company to exceed expectations by an average of 38% over the last four quarters. Analysts expect the company to continue to post solid results, with EPS projected to grow 28.8% in 2015 and 12.0% per annum over the next five years. Shares are also attractively valued at just 13.2X NTM EPS. NAVG was founded in 1982 and is headquartered in Stamford, CT.
Neenah Paper, Inc. (NYSE: NP)
Neenah Paper, Inc. is a leader in premium image and performance-based products. The company’s product offerings are highly diverse, ranging from filtration media for automotive transportation to lightweight abrasive paper for sanding, medical packaging, image transfer, and decorative components papers and writing papers used for business and personal stationery, and a variety of other specialized papers. Products are sold through authorized paper distributors, converters, and direct sales in over 70 countries worldwide. Double-digit EPS growth is expected over the next five years as NP continues to diversify its product offerings and improve manufacturing efficiencies. With a strong balance sheet and increasing operating cash flow, NP has also increased its quarterly dividend four times in the last two years, including an 11% in November 2014. Neenah was founded in 2004 and is headquartered in Alpharetta, GA.
NETGEAR, Inc. (NasdaqGS: NTGR)
NETGEAR, Inc. provides networking products to consumers, businesses, and service providers. Consumer offerings include home networking, storage and digital media products to connect people with the Internet and their content and devices. NETGEAR also provides businesses with moderately priced networking, storage and security solutions. In addition, the company provides service providers with retail-proven, mobile broadband solutions for their customers on the go. Products are sold in approximately 45,000 retail locations around the globe, and through approximately 36,000 value-added resellers. NTGR has seen significant improvement in sales to the European market and should see a turnaround in sales to U.S. consumers during 2015. On a price-to-NTM EPS basis, the company currently trades well below the communications equipment peer average of 16.4X and its own 3-year historical average of 14.5X. NETGEAR was founded in 1996 and is headquartered in San Jose, CA.
OSI Systems, Inc. (NasdaqGS: OSIS)
OSI Systems, Inc., is a vertically integrated designer and manufacturer of specialized electronic systems and components for critical applications in the homeland security, healthcare, defense and aerospace industries. Analysts expect EPS to grow 14.1% in the company’s fiscal year ending June 30, 2015. More than a decade after the 9/11 terror attacks, homeland security is still a growing business. Of the nation’s 2,100 airport security lanes, approximately 90 percent use X-ray scanners, like those manufactured by OSIS. However, many of these units are now over 10 years old. The resulting upgrade cycle is expected to continue to provide OSIS with a strong catalyst for EPS growth. Cargo screening – a largely un-penetrated market – is also expected to increase in the intermediate term. Unlike many of its competitors, OSIS also enjoys greater diversification through its healthcare and optoelectronics segments; combined these two segments accounted for 51% of FY2014 sales. The company was founded in 1987 and is headquartered in Hawthorne, CA.
Pinnacle Foods, Inc. (NYSE: PF)
Pinnacle Foods Inc. is a leading producer, marketer and distributor of branded convenience food products, including shelf-stable and frozen foods. PF’s portfolio of well-known brands includes Birds Eye, Van de Kamp’s, Mrs. Paul’s, Lender’s, Celeste, Hungry-Man, Aunt Jemima, Duncan Hines, Mrs. Butterworth’s, Log Cabin, and Snyder of Berlin. The company sells its products through supermarkets, grocery wholesalers and distributors, mass merchandisers, super centers, convenience stores, dollar stores, drug stores, and warehouse clubs in the United States and Canada, as well as in military channels and foodservice locations. Analysts expect the company to produce double-digit EPS growth in 2015 and beyond. One potential catalyst is the November 2014 acquisition of Garden Protein International, which is expected help drive growth through expansion into the health and wellness segment of the frozen foods market. In addition to its earnings growth potential, strong cash flow generation should allow the company to continue it’s track record of dividend increases. Pinnacle Foods Inc. is based in Parsippany, NJ.
Piper Jaffray Companies (NYSE: PJC)
Piper Jaffray Companies provides investment banking, institutional brokerage, asset management, and related financial services in the United States and Europe. PJC has handily exceeded analyst expectations in each of the last four quarters. Recent results were driven by increased investment banking activity and a surge in assets under management from $10.6 billion a year ago to $12.2 billion at September 30, 2014. PJC is expected to grow 10% per annum over the next five years, yet shares remain attractively priced at just 12.7X NTM EPS. Shares may be further buoyed by an additional $100 million authorization under the company’s stock buyback program. PJC was founded in 1895 and is headquartered in Minneapolis, MN.
Planar Systems Inc. (NasdaqGS: PLNR)
Planar Systems, Inc. develops, manufactures, and markets display and digital signage technology. Customers include retailers, educational institutions, government agencies, businesses, utilities and energy firms, and home theater enthusiasts. PLNR has successfully shifted its product focus away from slow growth, low margin commercial and industrial display monitors to digital signage. Digital signage revenues increased 41.6% in the fiscal year ended September 27, 2014, helping put the company back into the black with full-year EPS of $0.18 versus -$0.31 in the year ago period. With the digital signage business expected to account for over 50% of sales in FY2015, EPS estimates continue to move upward, jumping 58.6% in just the last 60 days. PLNR is now expected to see EPS increase 28% to $0.46 in FY2015. Despite the firm’s strong growth prospects, shares are still attractively valued at just 14.2X NTM EPS. Planar Systems was founded in 1983 and is headquartered in Beaverton, OR.
Portland General Electric Co. (NYSE: POR)
Portland General Electric Company is an integrated electric utility engaged in the generation, purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. It operates 5 thermal plants, 7 hydroelectric plants, and a wind farm located at Biglow Canyon in eastern Oregon; and approximately 1,141 circuit miles of transmission lines, as well as 26,867 circuit miles of primary and secondary distribution lines that deliver electricity to its customers. The company also purchases and sells electricity and natural gas in the wholesale market to utilities, brokers, and power marketers in the United States and Canada. POR currently trades at a discount to its small cap utility peers, despite projected annual EPS growth of 8.0% over the next five years. POR also offers a substantial dividend yield of approximately 3%, with robust free cash flow generation that could allow the company to further increase its quarterly dividend payments in 2015. The company was founded in 1930 and is headquartered in Portland, OR.
Travel Centers of America LLC (NYSE: TA)
TravelCenters of America LLC operates and franchises travel centers primarily along the United States interstate highway system. The company’s travel centers offer diesel fuel and gasoline; operates full service restaurants under the Iron Skillet and Country Pride brands; and operates quick serve restaurants under the Arby's, Burger King, Dunkin' Donuts, Pizza Hut, Popeye's Chicken & Biscuits, Starbuck's Coffee, Subway, and Taco Bell brands. TA also operates truck repair and maintenance facilities, which offer maintenance and emergency repair and road services As of November 20, 2014, the company operated 251 full-service locations under the TA and Petro Stopping Centers brands. While fuel sales is a notoriously low margin business, retail fuel prices tend to be sticky, which should allow TA to realize higher margins in 2015. Lower gas and diesel prices may also stimulate retail sales due to increased travel and transportation. Analysts expect TA to grow EPS by 15% in 2015. The company was founded in 1992 and is headquartered in Westlake, OH.
United Insurance Holdings Corp. (NYSE: UIHC)
United Insurance Holdings Corp. operates as a property and casualty insurance holding company that sources, writes, and services residential property and casualty insurance policies in Florida, Massachusetts, New Jersey, North Carolina, Rhode Island, South Carolina, and Texas. The company offers homeowners policies and related coverage accounts; coverage options for standard single-family homeowners, tenants, and condominium unit owners; and flood policies. UIHC continues to benefit from upward estimate revisions following strong earnings growth over the last four quarters. Top line growth has been fueled by double-digit increases in net earned premiums and a near doubling of investment income. Operating and policy acquisition costs have also declined as a percent of revenues. Analysts expect the company to grow EPS by 20% in 2015. The company is also attractively valued at just 12.3X NTM EPS. United Insurance Holdings Corp. is based in St. Petersburg, FL.