|Written by GSCR Staff|
|Wednesday, 11 November 2015 07:05|
First and foremost, we want to wish all of our service men and women, past and present, a blessed Veterans Day. We have the freedoms we do because of you, and cannot thank you enough.
In this week’s Goldman Guide we started talking about the end of year dynamics in the market, particularly in small can microcap stocks. Now is the time to look at stocks that have been downtrodden this year that look to be candidates for 2016 accumulation.
Illustrated below is the one year chart for Briggs & Stratton Corporation (NYSE – BGG - $17.55) that indicates the stock has been up and down this year, but overall down 12% from the opening of $20.21 on January 1st.
Additionally, we featured BGG in the Market Monitor on Tax Day this year at $20.20. So our pick is also down close to 12%
BGG Chart – Year to Date
The Company is a diverse outdoor products manufacturer offering everything from lawn mowers to snow blowers. We believe the improved economy will help Briggs & Stratton meet the revenue expectations of over $1.9 billion this year and next. Along those lines, the Company has hit or exceeded revenue expectations four quarters in a row and met or exceeded EPS forecasts three of the last four. This is critical when considering what 2015 losers Wall Street will look to for 2016.
Could BGG be an M&A target? This is probably unlikely, with the possible exception of a multinational conglomerate. In any event, an Enterprise Value/EBITDA of 7 shows an exceptional value in this respect as anything under 10 is really great. This is something else that could catch the eyes of large institutional investors.
Finally, the Company continues to innovate related to its existing products and introduce new ones. Not only will this grow the customer base, it keeps existing customers coming back for maintenance and upgrades. The Company had $54 million cash on hand as of the end of 3Q15. A positive sign in this regard.
We believe BGG is a solid candidate for a 2016 turnaround story. The stock has averaged over half a million shares traded per day over the last three months. However, this figure is truly a statistical average, as large moves have been predicated with volumes with over 1 million shares traded per day. Look for the sign to get in when there are up days on this order. We believe the stock gets back to the $20 range by late Q1 or early Q2 in 2016.
Have a great day!
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com