Quarters + Certara ??!?
Let’s try to stay organized. Here are the upcoming quarters:
Kinder Morgan - 7/16 - in line
Pepsi - 7/17 - beat by $.09
Sysco 7/20 post
Steel Dynamics 7/21 post
Alexandria 7/21 post
Halliburton 7/21 pre
Matador 7/22 post
Iridium 7/24 pre
Teck 7/24 pre
Darling 7/24 pre
Red Rock 7/29 post
Sinclair 7/31 pre
Chart 7/31 pre
Middleby 8/1 pre
Tyson 8/4 pre
Rayonier 8/6 post
Nutrien 8/6 post
Royal Gold 8/6 post
Corteva 8/6 post
RXO - 8/7 pre
Nexstar 8/7 during
Restaurant Brands 8/7 post
Thor 9/25 pre
Brunswick - not disclosed
Gentex - not disclosed
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ideas:
WillScot 7/31 post
Norwegian 7/31 pre
Starbulk 8/6 post
Merck 7/29 pre
Perrigo 8/6 during
Scotts 7/30 pre
Mohawk 7/24 post
Starwood 8/7 pre
Lyondell 8/1 pre
Portillo’s 8/5 pre
First Watch 8/5 pre
Columbia 7/31 post
Entegris 7/30 pre
Constellation 10/3, reported 7/1
Certera 8/6 post
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I was just about to post the following writeup, but then I noticed a “warning” on the stock from my old friends at Behind the Numbers. BTN is an institutional research service that evaluates “quality of earnings”.
BTN has some problems with Certara’s software and acquisition accounting. Their warning is enough to scare me away for now, but let’s keep watching.
Smaller cap ideas need a much greater degree of detail work.
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When do value investors get to buy growth stocks?
When they get cheap enough!!!
After just a few hours of work I have a new candidate to consider for the Top 25 Model portfolio.
Let’s consider the biosimulation leader - Certara - CERT - $10
Just the other day a new name showed up on my low price/book screen, I had never heard of Certara before. I set the name aside because I was not really looking for more healthcare names. The world of non-financial, US headquartered, and over $1billion, companies is about 1500. The bottom quintile (20%) sell for less than 1.7x book. CERT just joined that bottom quintile.
I was looking for more “great” companies. Lately I have been fascinated by Core & Main - CNM - $62, a large holding of my favorite value hedge fund Select Equity. CNM is doing great in the water treatment business, but the stock is too expensive. One more time, I went to the Select Equity page on WhaleWisdom and tried to find a new idea. There it was, that same name from my screen, Certara. In just the last quarter Select Equity had bought over 1 million shares of CERT.
A quick check of the CERT showed that Wasatch Advisors owns 6%. Wasatch is one of my favorite growth investors (the list is very short). Wasatch has owned the stock for several years, and added a small amount in the last quarter. Overall, this a small, but meaningful positive for the investment case.
The small investment banker, William Blair, was one of the firms that brought CERT public 5 years. This is a significant positive. Blair has historically done a great job of find interesting “‘niche” companies to bring public.
CERT has a solid and understandable 30 minute presentation at the Willam Blair conference on their website. For companies that I have no history with, it is important to have these presentations.
From the presentation I learned the basics of CERT business. Every major drug company is a customer. Some buy the software, others hire CERT to help with a specific test.
CERT could be a major beneficiary ot the phaseout of animal testing by the FDA.
CERT is only trying to grow sales 8-10% in this difficult drug company environment.
The CEO comes from a long stint at duPont, and has been around since CERT went public. The CEO is also on the board at the very well managed West Pharmaceutical. Given CERT’s stock is down from $30 to $11, he might be on thin ice.
In April CERT announced their first authorization to buy back an much as $100 million in stock, and did $25 million in the most recent quarter.
The balance sheet is solid, and recent acquisitions have been reasonable
Much more work is needed, but CERT is an interesting idea.