tbh I don't like any of them, because all are low or negative ROIC which is reflected in their stock prices going nowhere for ages (last 10 years). IMO the events discussed would not fundamentally change the quality of the companies. (Revenue acceleration does not help if a company reinvests capital at negative rates).
I think that is true if we look in the rear mirror. BKTI with the outsourcing of the manufacturing and potential higher margin product should be able to produce good ROCE. Enterprise Group enjoyed also decent ROCE at the uplift in a cycle. PPSI same. Those are not compounders with a history of high ROCE, but that’s where the opportunity lies.
Thank you for the great work! I love these kind of posts!
Thank you! Appreciate the kind words.
Sebastian, what is your anchoring bias that won't allow a position in e.to?
I looked deeply at the company when it was trading at $0.45. It is not a great business, so entering now at 1.15+ is hard
Makes sense if it's not a great business at .45 then 2.6x makes it much harder to enter a position confidently
You have just given me my new research project with PPSI. I am going to dive into this idea today.
Have a great Memorial Day.
Thanks, that’s great to hear! Happy Memorial Day to you too!
Don't have a lot of time lately but thoroughly enjoys reading your posts 🙏
Thank you very much, I really appreciate that.
tbh I don't like any of them, because all are low or negative ROIC which is reflected in their stock prices going nowhere for ages (last 10 years). IMO the events discussed would not fundamentally change the quality of the companies. (Revenue acceleration does not help if a company reinvests capital at negative rates).
I think that is true if we look in the rear mirror. BKTI with the outsourcing of the manufacturing and potential higher margin product should be able to produce good ROCE. Enterprise Group enjoyed also decent ROCE at the uplift in a cycle. PPSI same. Those are not compounders with a history of high ROCE, but that’s where the opportunity lies.
Yes, maybe I just don't trust CEOs who haven't demonstrated good capital allocation in the past. But will be definitely interesting to watch.
The CEO of BKTI for example is new. Strategy had STRT has changed has well since Gabelli put members on the board
Great work! PPSI and STRT look very intriguing right now for potential investment opportunities. Hope you have a great Memorial Day weekend!
Thank you very much. I also follow those closely. Happy Memorial Day to you as well!