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Spanning the globe to bring you the constant variety of stocks… the thrill of victory… and the agony of defeat… the human drama of market competition… this is the Wide World of $$$MR. MARKET$$$! So maybe the market ain't so red hot these days. Have no fear. There are hundreds of winners being born every day.
So you want to buy a new stock eh? What’s next? The new Iphone? Blue Ray technology? Something that will allow you eat dinner and smoke a cigar with no hands? (According to Smells, you can already do this in Thailand).
I don’t know much about this no hand eating thing. I like eating with my hands, I even like eating with my fork. "I eat because I'm unhappy, and I'm unhappy because I eat. It's a vicious cycle. Now if you'll excuse me, there's someone I need to get in touch with and forgive: meself,"
Now there’s nothing really sexy about a fork. You can’t take a picture of your friends passed out on a couch with it, you can’t play a new song with it and you can’t make an Energy Drink out of it. Forks are not sexy. However they can be profitable.
Today I bought stock in Cascace Corporation (CAE) at 70.25. I will sell it in 4 to 6 weeks at 80.88. Here’s why I like CAE:
First of all, look at this outrageous chart. CAE’s stock has been patiently marching upwards and rewarding shareholders for quite some time. In fact it’s 12 month R^2 correlation coefficient is 0.89.
The stock has a very conservative PE of 15.6 and is up in price 96% over the last 52 weeks.
Cascade continues to grow as the premier supplier of lift truck attachments and related products. Cascade Manufacturing Company was founded in 1943 in Portland, Oregon as a small machine shop employing just four people. Cascade expanded its product offering dramatically in 1996 and 1997 with the acquisition of five companies including Kenhar Corporation, the global leader in forks. See? You knew I’d eventually get back to the fork. But it ain’t the fork you eat with. Cascade makes forks and various attachments for fork trucks.
Did you ever go to Sam’s Club or Home Depot and wonder how in the world all that stuff gets up on the high shelf? Well, no surprise is that they use a fork truck. When I was an engineer right out of college, I worked in an industrial gas cylinder plant in South Sudbury , MA. Joe Delaney was a plant operator who showed me how to use a plant truck. When he used to lift up the big drums with the fork truck, he used to make all kinds of facial expressions, so when I started using the fork truck, I tried to copy the same facial expressions but I wasn’t as good as Joe at either operating the fork truck or at making faces.
Cascade makes gear used to move consumer products around warehouses. Its devices and attachments include the fork of a forklift. It also makes all kinds of assorted gadgets that go on the fork so you can lift all kinds of different things.
Take a look:
Now then…why is this company growing its revenue and earnings each and every year for the last 5 years? Think….think harder. Ok, open your eyes. How many Sam’s Clubs, BJ’s, Costco’s and Home Depots do you sees these days? How many do you see compared to 5 years ago? How many do you think will be in China in the next 10 years? Getting the picture?
Cascade dominates its niche in the U.S. About 90% of U.S. forklifts rely on its side shifter. Last year alone Cascade sold more than 1 million forks. Cascade is set to pour $18 million into its Chinese operations and increase its manufacturing capacity there by 150%. Within its industry, Cascade controls as much as 80% of the U.S. market.
At about $480 million in annual sales, the market isn't HUGE, which allows Cascade room to grow and also stay under the radar of larger competitors.
Cascade's earnings took a huge jump in the first quarter of fiscal 2007, increasing 116% over the year-earlier period, with sales growing 15%. The company is also enjoying notable revenue growth and solid stock price performance. In spite of all this, CAE still trades at a slight discount to its peers in the industry. The company is now generating positive operating income from non -USA sales A strong demand for lift trucks in Europe lifted the company's sales in the continent by 25 percent to $41.6 million for the quarter.
Net income for the first quarter more than doubled to $23.8 million, or $1.90 a share, while net sales rose to $135.5 million. ANAL-ysts were expecting earnings of 93 cents a share, before exceptional items, on revenue of $127.6 million. Higher sales were primarily the result of higher levels of business activity in Europe, Asia Pacific and China. Details of the sales increase over the prior year first quarter follow (in millions):
Percentage changes in lift truck industry shipments, by region are greatest in China, up 23%, so Cascade is tapping into a rich vein. The net sales increase in China is due to a very strong Chinese lift truck market. Gross margin percentages in China increased to 44% from 39%. This increase reflects the benefit of sourcing certain raw materials and components from within China and lower production costs due to process improvements.
In the last 4 years, the company has grown its sales each and every year. Total increase in revenues are 85% over this period with earnings increasing over 112%. Their products are good and their business model is working and they are tapping into new markets. It’s a great formula for success.
So what does this mean for the company’s stock price going forward?
If we assume initial earnings of $58.2 million (from the last 12 months) grow at the existing rate of 9.50%, and we discount those future earnings at a rate of 15.00%, we arrive at a net present value for the company's next 10 years of earnings of $449 million. To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%, and we arrive at a continuing value of $630 million. To complete the calculation we add these two figures together, subtract the long-term debt for CAE ($40.0 million), and divide by the outstanding shares (11.8 million) to get a per share intrinsic value of $87.79, which is well past my sales target..
CAE's total debt/equity ratio is 79.04% lower than the industry average, which means the company may be paying less in interest than its competitors. CAE's long-term debt/equity ratio is 71.43% lower than the industry average, which means the company may not be as financially constrained by interest payments as its competitors. CAE's 1 year ROE is 9.29% higher than the industry average. CAE's 1 year ROA is 74.31% higher than the industry average, which may indicate that CAE has used its assets much better than its competitors have. This is often a sign of good management.
CAE's 1 year ROIC is 43.27% higher than the industry average, which may indicate that CAE has made very good use of its debt and equity capital. This is often a sign of good management.
CAE's price/earnings (P/E) ratio is 85.85% lower than the industry average, which indicates that investors are buying CAE's earnings at a significant discount. This lower valuation may indicate a bargain.
CAE’s earnings have surprised to the upside in each of the last 4 quarters, which indicates to me that ANAL-ysts are still focusing on the sexy stuff, and leaving the forks for the boring investors who just want to make money. I look for Cascade’s earnings to continue to grow at right along this existing trend, which has not quite been bought into by the ANAL-ysts or the marketplace. It won’t take a forktruck to lift CAE’s stock price if they keep going. That’s why I think I have yet another $$$MR. MARKET$$$ winner in CAE.
Tell me what you think of CAE and this write up.
I am HUGE!
$$$MR. MARKET$$$
So you want to buy a new stock eh? What’s next? The new Iphone? Blue Ray technology? Something that will allow you eat dinner and smoke a cigar with no hands? (According to Smells, you can already do this in Thailand).
I don’t know much about this no hand eating thing. I like eating with my hands, I even like eating with my fork. "I eat because I'm unhappy, and I'm unhappy because I eat. It's a vicious cycle. Now if you'll excuse me, there's someone I need to get in touch with and forgive: meself,"
Now there’s nothing really sexy about a fork. You can’t take a picture of your friends passed out on a couch with it, you can’t play a new song with it and you can’t make an Energy Drink out of it. Forks are not sexy. However they can be profitable.
Today I bought stock in Cascace Corporation (CAE) at 70.25. I will sell it in 4 to 6 weeks at 80.88. Here’s why I like CAE:
First of all, look at this outrageous chart. CAE’s stock has been patiently marching upwards and rewarding shareholders for quite some time. In fact it’s 12 month R^2 correlation coefficient is 0.89.
The stock has a very conservative PE of 15.6 and is up in price 96% over the last 52 weeks.
Cascade continues to grow as the premier supplier of lift truck attachments and related products. Cascade Manufacturing Company was founded in 1943 in Portland, Oregon as a small machine shop employing just four people. Cascade expanded its product offering dramatically in 1996 and 1997 with the acquisition of five companies including Kenhar Corporation, the global leader in forks. See? You knew I’d eventually get back to the fork. But it ain’t the fork you eat with. Cascade makes forks and various attachments for fork trucks.
Did you ever go to Sam’s Club or Home Depot and wonder how in the world all that stuff gets up on the high shelf? Well, no surprise is that they use a fork truck. When I was an engineer right out of college, I worked in an industrial gas cylinder plant in South Sudbury , MA. Joe Delaney was a plant operator who showed me how to use a plant truck. When he used to lift up the big drums with the fork truck, he used to make all kinds of facial expressions, so when I started using the fork truck, I tried to copy the same facial expressions but I wasn’t as good as Joe at either operating the fork truck or at making faces.
Cascade makes gear used to move consumer products around warehouses. Its devices and attachments include the fork of a forklift. It also makes all kinds of assorted gadgets that go on the fork so you can lift all kinds of different things.
Take a look:
Now then…why is this company growing its revenue and earnings each and every year for the last 5 years? Think….think harder. Ok, open your eyes. How many Sam’s Clubs, BJ’s, Costco’s and Home Depots do you sees these days? How many do you see compared to 5 years ago? How many do you think will be in China in the next 10 years? Getting the picture?
Cascade dominates its niche in the U.S. About 90% of U.S. forklifts rely on its side shifter. Last year alone Cascade sold more than 1 million forks. Cascade is set to pour $18 million into its Chinese operations and increase its manufacturing capacity there by 150%. Within its industry, Cascade controls as much as 80% of the U.S. market.
At about $480 million in annual sales, the market isn't HUGE, which allows Cascade room to grow and also stay under the radar of larger competitors.
Cascade's earnings took a huge jump in the first quarter of fiscal 2007, increasing 116% over the year-earlier period, with sales growing 15%. The company is also enjoying notable revenue growth and solid stock price performance. In spite of all this, CAE still trades at a slight discount to its peers in the industry. The company is now generating positive operating income from non -USA sales A strong demand for lift trucks in Europe lifted the company's sales in the continent by 25 percent to $41.6 million for the quarter.
Net income for the first quarter more than doubled to $23.8 million, or $1.90 a share, while net sales rose to $135.5 million. ANAL-ysts were expecting earnings of 93 cents a share, before exceptional items, on revenue of $127.6 million. Higher sales were primarily the result of higher levels of business activity in Europe, Asia Pacific and China. Details of the sales increase over the prior year first quarter follow (in millions):
Percentage changes in lift truck industry shipments, by region are greatest in China, up 23%, so Cascade is tapping into a rich vein. The net sales increase in China is due to a very strong Chinese lift truck market. Gross margin percentages in China increased to 44% from 39%. This increase reflects the benefit of sourcing certain raw materials and components from within China and lower production costs due to process improvements.
In the last 4 years, the company has grown its sales each and every year. Total increase in revenues are 85% over this period with earnings increasing over 112%. Their products are good and their business model is working and they are tapping into new markets. It’s a great formula for success.
So what does this mean for the company’s stock price going forward?
If we assume initial earnings of $58.2 million (from the last 12 months) grow at the existing rate of 9.50%, and we discount those future earnings at a rate of 15.00%, we arrive at a net present value for the company's next 10 years of earnings of $449 million. To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%, and we arrive at a continuing value of $630 million. To complete the calculation we add these two figures together, subtract the long-term debt for CAE ($40.0 million), and divide by the outstanding shares (11.8 million) to get a per share intrinsic value of $87.79, which is well past my sales target..
CAE's total debt/equity ratio is 79.04% lower than the industry average, which means the company may be paying less in interest than its competitors. CAE's long-term debt/equity ratio is 71.43% lower than the industry average, which means the company may not be as financially constrained by interest payments as its competitors. CAE's 1 year ROE is 9.29% higher than the industry average. CAE's 1 year ROA is 74.31% higher than the industry average, which may indicate that CAE has used its assets much better than its competitors have. This is often a sign of good management.
CAE's 1 year ROIC is 43.27% higher than the industry average, which may indicate that CAE has made very good use of its debt and equity capital. This is often a sign of good management.
CAE's price/earnings (P/E) ratio is 85.85% lower than the industry average, which indicates that investors are buying CAE's earnings at a significant discount. This lower valuation may indicate a bargain.
CAE’s earnings have surprised to the upside in each of the last 4 quarters, which indicates to me that ANAL-ysts are still focusing on the sexy stuff, and leaving the forks for the boring investors who just want to make money. I look for Cascade’s earnings to continue to grow at right along this existing trend, which has not quite been bought into by the ANAL-ysts or the marketplace. It won’t take a forktruck to lift CAE’s stock price if they keep going. That’s why I think I have yet another $$$MR. MARKET$$$ winner in CAE.
Tell me what you think of CAE and this write up.
I am HUGE!
$$$MR. MARKET$$$
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