Companies Buying Back Shares with ROC of over 14%

In this post I will be discussing the prospects of three companies that came up using the Gurufocus’ All-in-One Screener using the parameters of:

  • P/S (0-1)
  • P/B (0-2)
  • P/E (1-20)
  • ROC (5-75%)
  • Debt to equity under 1
  • A share buyback rate of 2% to 15% (10-year average)
  • Market cap in between $20 million and $500 million

Initially the screen brought back eight companies but I eliminated a few based on P/E exceeding ROE, P/B exceeding 1.5 and one (KYCN) was subject to a merger with Contran and is now a wholly owned subsidiary. The ones that made the cut and deserve further research are below.

1) SL Industries Inc. (SLI)

Market Cap: $98 million
P/E: 8.38
P/S: 0.49
P/B: 1.6
ROC: 39%
ROE: 15%
Debt-Equity: 0.05
Dividend: None

Incorporated in New Jersey as G-L Electronics Company in 1956. The company is made up of five subsidiaries, SL Power Electronics CorporationTEAL Electronics CorporationMTE Corporation,SL Montevideo Technology and RFL Electronics Inc. The company manufactures various things from communications and protection products to monitor and protect power grids, rail and highway systems to LED lights used in applications from aerospace and medical industries to common day use in street lights.

At first glance notably excessive environmental fees are booked as liabilities that you may want to examine further. On a more positive note the share float has been bought back over the last three years at an astonishing pace. All the while, retained earnings and book value have been growing steadily. The 10-year average revenue and free cash flow growth is over 10%.


SLI data by GuruFocus.com


SLI data by GuruFocus.com

2) Core Molding Technologies (CMT)
Market Cap: $68 million
P/E: 10.55
P/S: 0.48
P/B: 1.1
ROC: 19%
ROE: 14%
Debt-Equity: 0.11
Dividend: None

The company produces plastic and rubber products to the automotive after market industry. Company products include resin transfer (RTM), sheet-molding compound (SMC), multiple insert tooling (MIT), glass mat thermoplastic (GMT) and also manufactures products for other truck manufactures and the marine industry. The company’s two major customers are Navistar and PACCAR Inc. The company faces competition from a number of other molders including, Meridian Automotive Systems, Molded Fiber Glass Companies, Continental Structural Plastics, Sigma Industries and Premix. Retained earnings has been growing impressively with revenue and operating income. The business is a predictable moderate grower with 10-year average revenue and EBITDA growth of 7% and 13%.


CMT data by GuruFocus.com


CMT data by GuruFocus.com

Acme United Corporation (ACU)
Market Cap: $44 million
P/E: 11.82
P/S: 0.52
P/B: 1.3
ROC: 14%
ROE: 12%
Debt-Equity: 0.78
Dividend: 2.3% at 25% payout ratio

Acme United Corporation is a global supplier of cutting, measuring and safety products to the school, home, office, hardware and industrial markets. The company’s operations are in the U.S., Canada, Europe (Germany) and Asia (Hong Kong and China). Products include scissors, shears, guillotine paper trimmers, rotary paper trimmers, rotary cutters, hobby knives and blades, utility knives, manicure products, medical cutting instruments, pencil sharpeners, rulers, math tools, tape measures, first aid kits, personal protection products and over-the-counter medication refills.

Major competitors include Fiskars Corporation, Helix International Ltd. and Johnson and Johnson. The five main brands are Westcott, Clauss, Camillus, PhysiciansCare and Pac-Kit. Debt has more than doubled from 2010 and does not look encouraging at first glance. The brands of the company are not well known by me and I believe a competitive disadvantage is that consumers are not sticky to basic products that Acme United is in the business of selling, eventually ending in a price war or price follow strategy against a deep pocket market leader like J&J. It has good 10-year average revenue and book value growth.


ACU data by GuruFocus.com


ACU data by GuruFocus.com

The companies above warrant further research and I will be reading the recent years 10-Ks and past history of the companies over the coming days, picking one to research and write about in further depth. Stay tuned for the results.

“The farther backward you can look, the farther forward you will see.” – Winston Churchill

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s