03-02-2015, 10:57 PM
I just got an analysis of Compass Minerals published on SA today.
I was looking for some basic materials companies to choose from for our portfolios. I already have BBL in mine and it's at my desired allocation, the air companies are a little too steep for me here, ADM just isn't getting me excited at these prices, yada, yada, yada. You know, excuses for everything.
So, as I was screening through the January CCC list, I noticed CMP was keeping pretty steady at the 10% dividend growth rate mark and I've heard very little about them. Other CMP articles on SA have been mostly fluff with no deep information. I've glanced at them before but for some reason it didn't click. Seeing as I was freezing my you-know-what off and tired of shoveling/snowblowing here everyday since the beginning of the year, I thought I'd dig a little deeper and spent the last week researching the company and snow/ice removal technology. By the time I was done, I was comfortable enough to contemplate taking a stake in them. Oh, and I realized the plow drivers around here are not being as competent and diligent as they could be.
I like the new CEO (since 2013). He seems to want to grow the company but not take it too far from its circle of competence unlike some empire builders elsewhere. Since they've been public, every shareholder letter and a lot of press releases have talked about shareholder returns so I think the concept is also on the board's mind. The message has been consistent through the CEO changeover. I think this bodes well for the dividend since shares have been essentially steady for the 10 years they've been public. In other words, buybacks don't seem to be a priority for their cash.
Some further information is I'm not sure how accurate book value is. They've got two big holes in the ground for salt mines and I have no idea how to value them. Since they've been there a while and they were part of the divestiture, their carrying value may be way below what they are worth to another party. Because of this, price/book may be skewed.
Now, I wouldn't be surprised if the dividend growth slowed to the high single digits -- it is a commodity company -- but they've still got room in the payout ratio. Part of that may depend on future bolt-ons they're looking at.
Wouldn't you know it, the price jumped 3% today on no big news that I could find. No, it wasn't me. The article was published way after the opening bell. My target is just under $90 and I may add if the cash is there.
If you're interested, you can read the article here.
I was looking for some basic materials companies to choose from for our portfolios. I already have BBL in mine and it's at my desired allocation, the air companies are a little too steep for me here, ADM just isn't getting me excited at these prices, yada, yada, yada. You know, excuses for everything.
So, as I was screening through the January CCC list, I noticed CMP was keeping pretty steady at the 10% dividend growth rate mark and I've heard very little about them. Other CMP articles on SA have been mostly fluff with no deep information. I've glanced at them before but for some reason it didn't click. Seeing as I was freezing my you-know-what off and tired of shoveling/snowblowing here everyday since the beginning of the year, I thought I'd dig a little deeper and spent the last week researching the company and snow/ice removal technology. By the time I was done, I was comfortable enough to contemplate taking a stake in them. Oh, and I realized the plow drivers around here are not being as competent and diligent as they could be.
I like the new CEO (since 2013). He seems to want to grow the company but not take it too far from its circle of competence unlike some empire builders elsewhere. Since they've been public, every shareholder letter and a lot of press releases have talked about shareholder returns so I think the concept is also on the board's mind. The message has been consistent through the CEO changeover. I think this bodes well for the dividend since shares have been essentially steady for the 10 years they've been public. In other words, buybacks don't seem to be a priority for their cash.
Some further information is I'm not sure how accurate book value is. They've got two big holes in the ground for salt mines and I have no idea how to value them. Since they've been there a while and they were part of the divestiture, their carrying value may be way below what they are worth to another party. Because of this, price/book may be skewed.
Now, I wouldn't be surprised if the dividend growth slowed to the high single digits -- it is a commodity company -- but they've still got room in the payout ratio. Part of that may depend on future bolt-ons they're looking at.
Wouldn't you know it, the price jumped 3% today on no big news that I could find. No, it wasn't me. The article was published way after the opening bell. My target is just under $90 and I may add if the cash is there.
If you're interested, you can read the article here.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan