And we're making the move this month with quite a splash. This month's pick has a cash balance almost equal to its share price. It has two activists pushing it to repurchase their significantly undervalued shares. And the core business trades for just 6x EV / EBIT.
And that EBIT is very, very depressed. The company is one of the dominant players in their niche market, and most of the sales in their niche come from Europe. Needless to say, the past three years have not been kind.
But there's reason to believe hope is on the horizon. The company is making some significant investments that could help earnings recover to where they were pre-crisis- almost ten times higher than today's levels! If the investment succeeds, the company will likely trade at around its precrisis levels, almost 4x higher than today's prices.
If the company fails, then they'll likely be taken over a mere 50% or so above today's prices.
Sounds like a pretty good deal to us. The company apparently thinks so too- they've been repurchasing shares hand over fist (~30% of shares outstanding retired in 3 years) and just announced another stock buyback for almost 20% of their outstanding shares.
Little downside, huge upside. You can see why we're so excited to add it to our portfolio. Check out this month's newsletter and you'll see why too.
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