This month's magic formula pick returns to an industry we've
dipped our toe into twice before. Both of the previous picks have
been home runs with one up over 30% in under six months and the
other up almost 200% in less than a year.
This month's pick would be attractive as a stand-alone
investment. Its dividend yield is 6.5%, it's trading for a fair
valuation, and the company seems poised to grow rapidly as they
complete a corporate transition almost a decade in the making.
However, what really makes the stock attractive is the presence
of an activist shareholder. This shareholder has been involved in
only two stocks previously. Both were in the same industry as
this month's pick, and both stocks rewarded shareholders with
"multi-baggers" inside of one year. And it's not hard to see what
the activist sees here: if he can simply get the management team
to renew their focus on growth, the company could be earning
three times its current earnings base within the next two years.
To sum it up, this month's pick trades for a reasonable valuation
with a strong dividend yield, an activist investor, and huge
upside potential. We'll buy the shares on Monday.
Download this month's Microcap Magic Formula
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Also don't miss:
May Ben Graham Net-Net Newsletter
May's picks are two companies in the aviation industry. One
sold a division for more then their market cap while retaining
two profitable divisions. The second owns 30% of the first and
has earnings obscured by a one-time charge.
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