This video not only PROVES why my method of stock investing kicks butt for massive profits virtually guaranteeing you’ll be a multi-millionaire at some point in the future…
BUT, it also tells you EXACTLY what company to invest in to get started on the right foot.
Graco Inc. (GGG:nyse).
Graco makes equipment that moves, measures, controls and dispenses fluid materials. Its equipment does everything from squeezing tomato sauce onto millions of frozen pizzas to pumping oil. Graco makes all kinds of sprayers and pressure washers. Its equipment sprays on a wide range of paints, finishes and sealants.
Pumps, valves and motors may not sound like hot numbers to you. But these companies operate in that nexus of water, energy, agriculture and infrastructure. Most make things that move and control liquids and gases of all sorts - from oil and water to sealants and chemicals. The menu of what they do spans an enormous range, like that of an old ’50s diner. And business is good.
Its customers are all over the economic landscape. Fleet service centers, miners, remodelers, aerospace firms, farmers, food companies - basically almost anything you can think of. Yet Graco is still a small company - only $841 million in sales in 2007. It’s got lots of room to grow.
To get right at a key take-away from the conference in early February, after the market stumbled out of the worst January it’s had in a long time: The futures of companies with overseas operations will look much different from those confined mainly to North America. Most warned of slowing business in North America. None complained that anything of the sort was happening in China… or India… or the Middle East.
About 40% of Graco’s business is overseas. Of that, 26% is in Europe, 15% in Asia and the remaining 60% in North America. While North America slows (sales down 6% for the year), you
can guess what’s happening overseas. China is up 22%. Southeast Asia is up 23%. Eastern Europe is up 48%. Africa and the Middle East are up 19%. India is up 62%! These are the markets that will drive the results going forward. In fact, the company continues to beef up its overseas ops. It plans to add over 200 new distributors outside of North America in 2008.
Graco throws off lots of cash, has a great financial condition and has retired about 26% of its stock in the last decade. The company also generates returns on capital north of 30% -truly a staggering rate for an industrial company. And it has done this for years.
Management’s target is a 12% increase in earnings per share. Last year, earnings per share came in at $2.32. Based on the $35 stock price, Graco trades for about 15 times earnings and only 13.5 times the 2008 estimate. That’s way below the S&P 500 average of about 20 times. And the average S&P 500 company is not nearly the business Graco is. Here we get to the opportunity in the stock.
To top it off, Graco is available at a decent discount to peers and its own trading history. We should earn close to that return on capital - 30% per year - owning Graco. It makes a good core long-term holding.
We should see increased earnings and cash flow in 2008. Put that against a shrinking share count - and a little better market multiple, closer to peers - and I think Graco will get back to its old high of $46 per share before 2008 is out. Along with the dividend, that’s a 30%-plus annual return. In this market, that’s going to be outstanding. As good a business as Graco is, we could earn something close to that for years. If so, we’ll double our money inside of three years.
Recommendation:Buy Graco (GGG:nyse) once it closes above 36$ and up to $40 per share. As usual don’t forget to use good money management.
If you’re at all into Facebook (if you aren’t now, you will!), then you should check out this new group called simply “Stock Investing for Beginners”.
It has a good start of free information, and I’m sure it will still grow.
The guy who started the Facebook group, Palyn Peterson, is the same guy who offers the free stock investing kit at http://www.stockinvestingprofits.com, which is really good.
There are a couple of videos there at the moment, and tons more to be posted, as I’ve heard from a good source.
Here is the URL for the group:
Here is a really good HubPage on setting goals with your investing.
In part 2, it also goes over the pro’s and con’s of choosing a full-service stock broker, a “discount” stock broker (like online software such as Etrade), and money managers.
It’s a really good read.
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