Quarter End Craziness
It is the end of the quarter, and I miss not having a portfolio to evaluate and compare.
So let’s introduce my “second team” of value stocks, and thereby have a 20 stock portfolio to look at going forward. I will do some performance comparisons at the end of July.
I really like the stocks in this group, and I think they worthy of future study. I am on an educational mission, and I just need a little more content.
The second team portfolio:
Nutrien - NTR - if we are going to eat, we will need fertilizer, selling at 1x book, and a 4% yield
Helmerich & Payne - HP - the service stocks are cheaper than the producers, HP is a leader in drilling technology, selling at 1.3x book, and a 3% yield, this is my best energy stock
Brunswick - BC - I know the recession is coming, but I need one consumer cyclical in case it doesn’t. I really believe the company’s calculation that $6.00 is the downside for earnings.
Northwest Natural Holding - NWN - Let’s own one pure utility. NWN has interesting non-regulated assets. New CEO was a deal guy at Goldman and Lazard. Premium to the utility group 5.4% yield. Some concern about Oregon regulators. Market Cap under $1.5 billion.
Titan International - TWI - Maker of tires and wheels for agricultural equipment and lawn mowers. I have met management at the Three Part Advisors conference, and I think they are cleaning up a company with an interesting history. Recent acquisition clouds the picture a little. Selling at 90% of book.
Jack In the Box - JACK - 6th largest hamburger chain, but with plenty of new territory for growth. Strong franchise relations that could make good use of the Del Taco acquisition. Only 8x earnings.
First Cash Financial - FCFS - Pawn shops are the financial service of the future. Always worried about their Central American exposure. Again, this is a management I have met several times, and they have been impressive. Valuation could be a little cheaper, but the secular tailwinds are strong.
Revvity - RVTY - The lab equipment business is improving. Still a large holding of my favorite value hedge fund, Select Equity. Only 1.6x book for a great business. Select Equity did trim 25% of its position recently, so monitoring is needed.
Neogen - NEOG - A busted growth stock selling near book. Food and animal safety products have benefited from a large and stressful acquisition from 3M Company. Balance sheet could be better, but risk/return is outstanding. A new position at Select Equity. Ron Baron and Luther King are big holders.
Middleby - MIDD - the last guy to make the team. You get a market leader in food service equipment for only 12x. Also a large position for Select Equity. Kind of a boring idea, but sometimes boring is OK.
I know 20 stocks will be tough to follow, but my new rental place has bad cable, so I am finding more time to write.
The new portfolio is:
15% Healthcare - Smith & Nephew, Revvity, Neogen
20% Consumer Cyclical - Unifi, Brunswick, Jack in the Box, Red Rock Resorts
15% Industrial - Chart, Titan International, Middleby
10% Consumer Staples - Tyson, Treehouse
10% Utilities - Kinder Morgan, Northwest Natural
10% Materials - Corteva, Nutrien
10% Financial - First Cash, Royal Gold (cheating a little, but avoiding banks)
5% Energy - Helmerich & Payne
5% Communications Services - Cable One
0% Technology
0% REITS