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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
Elvis Costello wrote a song called “Alison” and he sung that his aim was true. Linda Ronstadt then covered the song, which was kind of different because it was a woman singing about a woman even though the words were the same, but it still came out pretty good. Did you ever watch the show “Melrose Place”? There was a guy in the show who used to always cry “Alison”…”Alison”. It was super annoying.
What does this have to do with truck transmissions? Well we need trucks to deliver all the stuff that we have been ordering from Amazon. Think about it…all of the miles being driven by cars back and forth to the shopping malls are being replaced by trucks delivering those very same goods right to your doorstep. You hope that their aim is true. But besides all of that, when these trucks roll into your neighborhood with an amateur driver behind the wheel, he’s hitting the brakes then hitting the gas then hitting the brakes again. It does a number on your transmissions. That’s why I think a lot more transmissions are going to be sold in the years ahead.
Today I bought stock in Allison Transmission (ALSN) at a price of 116.83. I will sell it in 4 – 6 weeks at 134.94. Here’s why I like ALSN.
First of all, look at this chart:
This stock is up 113% in the last 12 months, yet its PE is only 14. It’s good to grab onto a rocket like this when it’s still cheap. Over the same period, the S&P 500 is up only 32 percent. That’s an impressive market beat. And why not? This is a 10 billion dollar company that has a return on equity of 51% and boasts a profit margin on its basic products of 23%. It’s really a money machine. Its balance sheet shows that debt is under control with very strong cash flow.
Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles, and electrified propulsion systems worldwide. It provides commercial-duty on-highway, off-highway and defense fully automatic transmissions, and electric hybrid and fully electric systems. The company offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. It serves customers through an independent network of approximately 1,600 independent distributor and dealer locations.
ALSN is the world’s largest manufacturer of medium-and heavy-duty fully automatic transmissions. They have a history of of strong free cash flow generation. With that cash, their capital allocation priorities include: investing to grow the business, strategic acquisition priorities, and returning cash to shareholders. Increased infrastructure spending and construction will support demand for their products. Allison has an over 100-year history of providing high-quality innovative products and demonstrated value to end users. Over 350 Original Equipment Manufacturers rely on Allison for Vehicle Propulsion Solutions. Allison is committed to investing in and pursuing opportunities resulting from increased global defense spending in a multi-year growth cycle representing a $100 million incremental annual revenue opportunity over the next few years. They are poised to capture growth through continuation of long-standing partnership with United States Department of Defense and diversifying revenue through increased international defense sales. They certainly have a diversified revenue stream.
On October 29, ALSN reported their third quarter 2024 earnings results:
These earnings beat ANAL-ysts' consensus estimates of $2.01 by $0.26. A number of hedge funds have also added to their stakes in the stock. For example, FMR LLC increased its position in Allison Transmission by 24.3% during the 3rd quarter. Charles Schwab Investment Management Inc. grew its position in shares of Allison Transmission by 34.2% in the 3rd quarter. The hedgies love the liquidity of this big company, with a current ratio of 2.83. They have a huge revolving credit facility in place that they have hardly touched. They have a diversified revenue stream and an international presence. Having said that, Allison owns a ridiculous 80% of the market share in Class 8 vocational vehicles in North America.
This stock is a pretty cheap play on infrastructure, but why not hear what the boss, David S. Graziosi, has to say:
“In summary, Allison's third quarter results demonstrate not only the robust demand in our core end markets, but also our long-term plans for growth as we invest in our manufacturing operations in our product portfolio. Our growth opportunities and investments highlight Allison's commitment to providing a diverse array of propulsion solutions that contribute to a reliable, more sustainable future in transportation.”
Hey…take it from me. I know a lot about blowing out transmissions. I dropped a bunch of them in my Cadillac DTS going from red light to 70 mph to red light for 16 years up and down Route 1. Having reliable transmissions are a good thing. Allison has proven this over decades and has a loyal and solid customer base. There is a lot of momentum left in this stock, and there’s no question I’m going to take it to the pay window. I am HUGE!
$$$MR. MARKET$$$
Elvis Costello wrote a song called “Alison” and he sung that his aim was true. Linda Ronstadt then covered the song, which was kind of different because it was a woman singing about a woman even though the words were the same, but it still came out pretty good. Did you ever watch the show “Melrose Place”? There was a guy in the show who used to always cry “Alison”…”Alison”. It was super annoying.
What does this have to do with truck transmissions? Well we need trucks to deliver all the stuff that we have been ordering from Amazon. Think about it…all of the miles being driven by cars back and forth to the shopping malls are being replaced by trucks delivering those very same goods right to your doorstep. You hope that their aim is true. But besides all of that, when these trucks roll into your neighborhood with an amateur driver behind the wheel, he’s hitting the brakes then hitting the gas then hitting the brakes again. It does a number on your transmissions. That’s why I think a lot more transmissions are going to be sold in the years ahead.
Today I bought stock in Allison Transmission (ALSN) at a price of 116.83. I will sell it in 4 – 6 weeks at 134.94. Here’s why I like ALSN.
First of all, look at this chart:
This stock is up 113% in the last 12 months, yet its PE is only 14. It’s good to grab onto a rocket like this when it’s still cheap. Over the same period, the S&P 500 is up only 32 percent. That’s an impressive market beat. And why not? This is a 10 billion dollar company that has a return on equity of 51% and boasts a profit margin on its basic products of 23%. It’s really a money machine. Its balance sheet shows that debt is under control with very strong cash flow.
Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles and medium- and heavy-tactical U.S. defense vehicles, and electrified propulsion systems worldwide. It provides commercial-duty on-highway, off-highway and defense fully automatic transmissions, and electric hybrid and fully electric systems. The company offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. It serves customers through an independent network of approximately 1,600 independent distributor and dealer locations.
ALSN is the world’s largest manufacturer of medium-and heavy-duty fully automatic transmissions. They have a history of of strong free cash flow generation. With that cash, their capital allocation priorities include: investing to grow the business, strategic acquisition priorities, and returning cash to shareholders. Increased infrastructure spending and construction will support demand for their products. Allison has an over 100-year history of providing high-quality innovative products and demonstrated value to end users. Over 350 Original Equipment Manufacturers rely on Allison for Vehicle Propulsion Solutions. Allison is committed to investing in and pursuing opportunities resulting from increased global defense spending in a multi-year growth cycle representing a $100 million incremental annual revenue opportunity over the next few years. They are poised to capture growth through continuation of long-standing partnership with United States Department of Defense and diversifying revenue through increased international defense sales. They certainly have a diversified revenue stream.
On October 29, ALSN reported their third quarter 2024 earnings results:
- Record quarterly net sales of $824 million, up 12% year over year
- Net Income of $200 million, up 27% year over year
- Diluted EPS of $2.27, a quarterly record, up 29% year over year
- Increasing full year 2024 revenue, earnings and cash flow guidance
These earnings beat ANAL-ysts' consensus estimates of $2.01 by $0.26. A number of hedge funds have also added to their stakes in the stock. For example, FMR LLC increased its position in Allison Transmission by 24.3% during the 3rd quarter. Charles Schwab Investment Management Inc. grew its position in shares of Allison Transmission by 34.2% in the 3rd quarter. The hedgies love the liquidity of this big company, with a current ratio of 2.83. They have a huge revolving credit facility in place that they have hardly touched. They have a diversified revenue stream and an international presence. Having said that, Allison owns a ridiculous 80% of the market share in Class 8 vocational vehicles in North America.
This stock is a pretty cheap play on infrastructure, but why not hear what the boss, David S. Graziosi, has to say:
“In summary, Allison's third quarter results demonstrate not only the robust demand in our core end markets, but also our long-term plans for growth as we invest in our manufacturing operations in our product portfolio. Our growth opportunities and investments highlight Allison's commitment to providing a diverse array of propulsion solutions that contribute to a reliable, more sustainable future in transportation.”
Hey…take it from me. I know a lot about blowing out transmissions. I dropped a bunch of them in my Cadillac DTS going from red light to 70 mph to red light for 16 years up and down Route 1. Having reliable transmissions are a good thing. Allison has proven this over decades and has a loyal and solid customer base. There is a lot of momentum left in this stock, and there’s no question I’m going to take it to the pay window. I am HUGE!
$$$MR. MARKET$$$
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