Fall 2016
15 ideas
Analog Devices is a semiconductor company that is at reduced cyclical risk and is not commoditized, making it a strong investment opportunity.
Live Nation Entertainment is poised for growth due to its strong position in the live events industry and the increasing demand for live entertainment post-pandemic. The company has a robust pipeline of events and a growing ticketing platform that enhances its revenue potential.
Skyworks Solutions is well-positioned to benefit from the increasing demand for wireless communication technologies, particularly in the smartphone and IoT markets. The company's strong product portfolio and strategic partnerships will drive revenue growth in the coming years.
AMERCO, the parent company of U-Haul, is a compelling investment due to its strong brand recognition and consistent demand for its rental services. The company's focus on expanding its fleet and improving customer experience positions it well for future growth.
Live Nation is positioned to benefit from the growing trend of millennials spending on live experiences, which has led to increased revenue from ticket sales. The company has unique working capital dynamics that allow it to generate cash efficiently, and it is gaining market share in the secondary ticket market. Additionally, its growing festival portfolio enhances profitability and margins.
Skyworks Solutions is undervalued due to market overreactions to a slowdown in Apple smartphone sales, which has led to a significant drop in stock price. The company has a strong revenue growth potential as the dollar content of RF components in smartphones increases, and it has a solid financial position with no leverage and excess cash for acquisitions.
Skyworks Solutions has excellent operational economics with best-in-class revenue growth and profitability, driven by their unique ability to package RF components in smartphones. The company has a long runway for growth, particularly in the Internet of Things segment, and a target price of $127 suggests a 63% upside from current levels.
AMERCO is poised for continued revenue growth driven by demographic shifts towards renting versus home ownership, with a strong market share in the self-move rental market. The company has aggressively invested in its self-storage business, which will enhance margins and revenue growth, supporting a target price of $477, representing over 40% upside from current levels.
Facebook fits the investment framework of a 'compounder' due to its strong network effects on both the supply (users) and demand (advertisers) sides. With a total addressable market for advertising exceeding $500 billion globally, Facebook has significant room for growth despite currently holding a low single-digit share of revenue.
Insperity is a professional employment organization that has been underperforming due to governance issues and management compensation not being tied to performance. The firm believes that the business has great potential in a strong market, and they have engaged with management extensively to address these concerns.
The firm has been invested in Big 5 Sporting Goods for eight or nine years, with a partner on the board since 2011. The company has shown significant growth from around $7.50 to close to $17 per share, indicating a successful investment.
UHAL is undervalued at 6.7x forward EV/EBITDA and 12.5x forward P/E, especially given its strong return metrics of 11% ROIC and 21% ROE. The company is expected to experience significant margin expansion as its storage business grows, which will lead to a valuation increase of approximately 25% as it aligns with market averages.
Analog Devices is a unique semiconductor company with strong cash flow, high gross margins, and low capital expenditures. The company has a diverse customer base and operates in a market with high barriers to entry, making it less cyclical and more stable than its peers. With a projected earnings CAGR of about 20% and potential earnings power of $5 on a price of $60, the investment is deemed attractive.
Sony is exploring opportunities in virtual reality (VR), which is still in its early stages but has potential applications in gaming and consumer electronics. The company is well-positioned to leverage its balance sheet and R&D expertise in this competitive space.