When the Going Gets Tough, I Just Give Up - ASIX !?!?
OK, I am not really giving up, but it does kind of feel like I am.
I hate to hide in big cap names like Sysco, Halliburton, Alexandria Real Estate, and Restaurant Brands, but for right now that just feels like the best thing to do.
Many companies have not yet made 2025 estimates, so I want to wait for year end results to be reported, and 2025 estimates to be made. I do love uncertainty, but not maximum uncertainty. When I added aggressive stocks like RXO, Thor, Iridium, AES Corp., and Teck Resources, I felt it was best to balance things out with the more conservative big caps.
Maybe that feels like giving up, but for now let’s call it wisdom. A portfolio is not just your best 25 ideas, it is a balance between upside opportunity and downside risk.
Not only did I run to big caps, but I cut out my two small caps, Jack in the Box and Titan International. I have temporarily abandoned small caps, but “I shall return”.
I was reminded of my love for small caps when I came across what must the ultimate generic small cap/low price to book idea:
AdvanSix - ASIX - $28 is a $700 million market cap maker of acetone and nylon. ASIX was a spinoff of Honeywell ten years ago. They earned $5.00 in 2021 and $6.00 is 2022, and all the cool small small cap guys own the stock. The balance sheet is great, and only two random folks follow the company. Twenty years ago these sleepy and boring companies were my “bread and butter”, now I lean a little more toward a slightly higher quality company.
Just for fun let’s scan the world for some other Price/Books under 1.5x and with market caps below $3 billion.
These are stocks where I have done 1-2 hours of work, found nothing sensational, but said I would revisit one day. I know there is a “double” in here somewhere. Which one is it? My 20 favorite from best to worst:
AdvanSix - ASIX - $28 - acetone and nylon
MarineMax - HZO - $28 - boat retailing, I will miss this idea and hate myself for years, smart guys, marina assets
Ethan Allen Interiors - ETD - $28 - furniture, surviving in a tough industry
Ecovest - ECVT - $8 - catalyst chemicals, smart guys own
MillerKnoll - MLKN - $22 - really great office furniture
Phinia - PHIN - $48 - auto parts, spin from BorgWarner
Miller Industries - MLR - $67 - tow trucks, smart guys
OI Glass - OI - $28 - glass packaging
Clearwater Paper - CLX - $30 - recycled paper
Columbus McKinnon - $37 - CMCO - winches
Helix Energy - HLX - $10 - offshore oil service
B&G Foods - BGS - $7 - vegetables
Trimas - TRS - $28 - consumer packaging
SunCoke Energy - SXC - $10 - coke for steel making
Astec Industries - ASTE - $33 - road paving equipment
Monro - MNRO - $24 - auto repair, these are smart guys
American Axle - AXL - $6 - auto parts
Compass Minerals - CMP - $30 - salt
Rayonier Advanced Materials - RAYN - $8 - spinoff of the timber company
Minerals Technologies - MTX - $75 - specialty minerals