The One Small Cap Stock I'm Buying for the Long Run
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Intel trying its best to become a small-cap.
Dude, you just roasted the stock🤣🤣
They really are!!! I’m doing a deep dive on them now, I’ll have an update out asap
The problem is, there's no moat on the business or the industry it operates in. Atkore sells commoditized products that are sensitive to input costs and reliant on new construction. Foreign imports are a potential problem. So is domestic competition. It's just conduit, there is nothing special about Atkore's product vs competitors. In recent years they've worked on expanding their distribution network to reduce operating costs but there's only so much you can do to offset the type of product you sell.
That said, it could still be a very good short/medium term investment if you buy near the bottom of the cycle. But personally, it's not something I'd want to hold long-term when competition is high and any economic slowdown will hammer them. Management is solid but recent quarters show that the industry is so volatile they can't even forecast guidance out 2-4 quarters accurately.
You've made excellent points. I totally agree. Lack of an evident competitive advantage within a cyclical industry is not very appealing to me to consider long term
Well said!
That's partly true. If you look at the financial reports from recent years, the prices for commodities like copper haven't significantly impacted their profits. However, you are correct that their performance is heavily dependent on new construction and similar factors. That said, I'm confident our electrical infrastructure will require substantial investments, especially with the growth in data centers, green energy initiatives, and other developments.
I always like stronger assesments on the management team. If they are "commoditized" then what is management doing to differentiate its offering. I like to look at forward PE. To me if this ratio is lower than market it tells me that the market has a lack of confidence in management and execution of its plan.
@@geraldsahd3413 Management made a bunch of acquisitions the past several years, mostly in the conduit space. They also spent a good bit on internal investments for stuff like expanding their distribution network and manufacturing capabilities. Debt levels are quite manageable at around 1.25x last 12 months FCF. About half their debt is due in 2028 and the other half in 2031 (at 4.25%). They also bought back ~21% of shares over the last 10 quarters. If I remember correctly, the CEO and/or other execs have a background from Danaher (DHR), so they're definitely smart people that deserve their roles.
I think they've played the last few years about as well as they could have, they are simply limited by the industry they operate in. Again, I think this could be a good play, but its a tough one because you're fighting cyclicality that even management can't predict and a market that doesn't believe in the stock.
You should do a whole series on small caps
Great video. According to Morningstar, ATKR has a narrow moat as a specialized electrical component supplier. I think their buyback history indicates good capital allocation. But why is the short interest so high? What is the short thesis?
Thank you Jimmy, I bought ATKR last week and your analysis just confirmed my assumptions. Thanks
One concern that jumps out at me is that the demand for commercial and office space is dropping rapidly since the pandemic and advanced technology has demonstrated to businesses that more people can work from home to cut costs. So there are too many commercial and office buildings already built which will depress the non-residential construction for many years, maybe even permanently.🤔
Hi jimmy, What about the competition from mexican imports ?
They are cheaper, and pose the same risk what buffet faced with dexter shoes.
Interesting point. Which mexican manufacturers are making competing electrical components?
They mentioned price competition on stell conduit in the earnings call.
My question is why does everything look good but insiders are selling at low prices and hold a low % of the stock.
Insiders aren't selling anymore than usual
The company does huge buybacks tho. I’m not sure if it overcompensated what you are saying
There's a lot of valid reasons... If they give stock options to workers they might want to sell because they are already heavily weighted on the company since it's where they get their salary.. if company goes worse and worse they have their job at risk and the stocks lost value.
@@diogor8968 Your response is the most legit, verifiable and nuanced. However, the fact that the websites show $0 insider buys is a bit more concerning. While selling can be explained by personal financial planning, the complete absence of buying even when this undervalued is preventing me from pouncing on it. If there can be an answer as legit explaining this, then my worries are gone.
I know this company well. The only thing I can add is that the drop in revenue is also attributed to the excess inventory of electrical distributors in 2021-2022 (feeling of fear due to high inflation). I think steel conduit has too large a proportion of their income (at the moment). For these 2 reasons, I think the price will continue its decline for the next 2 to 4 quarters. I added it to my watchlist with a price in mind of $85. (Just to increase my margin of safety)
Love this video and the company too!
I started to buy at 70-80usd/share until 120-130. Sold it at 170ish.
At that point the PE was like 5..
I would wait a short time to see if the pressure on the stock price is still there and goes lower.
if their industry is in recession their income and pe will be free falling following it down
I wouldn't touch it until the unspoken recession is over
Really thorough analysis, Jimmy.
I am familiar with development and commercial development in particular is looking very grim with no light at the end of the tunnel (yet)
If it were me, I’d wait until commercial starts start to tick up and show some steady life before I would make a position on a company like this.
That said, please do more small/micro cap business analysis
Thank you
When all you said starts the process will be 3x. That’s the point of buy low and selling high
Actually pitched this stock in a competition a while ago, great to see you’re looking at it too Jimmy!
Great analysis! So 2 headwinds the company will have to face are commercial real estate and crucial commodity prices. How long will the down cycle in those will last? Haven't checked structure of future debt payments but if they're spread evenly over time at the same level they've been over the last 4 years or so at about $34M a year with an expected unlevered free cash flow of about $300M they should be good for almost a decade. Not bad!
Thank you for the video. I dont think it's a company for long term. Can you please make a video on Uber. I think it's way better than Atkore for long term. Highly appreciated 👍
the thing with cyclical stocks is that the best prices to jump in are when their fundamentals looks horrible
I like your channel but even by your own analysis this isnt a good time to buy this stock because material prices are still dropping so you should be waiting for that to turn around first and then, IMO, you should buy after the *following* earnings report because they are likely to continue losing revenue/profit until those material prices go up.
As of July 31, 2024, Atkore Inc. (ATKR) stock had a short interest of 6.21 million shares, with a change of 8.13% and a percentage of float of 17.56%. Short interest is typically expressed as a percentage of the total number of outstanding shares divided by the number of shorted shares. For example, a company with a 10% short interest may have 10 million short shares out of 100 million shares outstanding... What do you think about that?
short interest typically helps keep stock price suppressed and may have a rubber band type effect when short interest subsides.
what about the 17% short interest?
Thanks for your many INTEL high value recommendations over the years. Had to cut my losses last week. Also Alibaba. I like your valuation method but there’s a huge subjective element that’s missing.
Yeah is clear that simply calculating the value of a company by a number of different methods doesn’t make it a great buy, if the stock is down it maybe down for a reason other than value. In Intel case it’s the management team stubbornly sticking to the course they were on years ago.
Jimmy has called intel a good buy for years and yes Intel will turn around and could be a good buy now. But I know that there are other companies that are better buys and I decided to switch horses.
@@DJW007 Exactly the reason why Jimmy has diversified his holdings. His whole portfolio is up quite a lot even though there's been a couple of misses. That's one of the core lessons in investing. You can't be right about all of your bets, you just have to be right about most of them.
@@TheKolopololo Yeah I agree with you. I’m just saying that for me, I have to draw a line in the sand that tells me that my thesis for buying has broken down and I need to reassess or find another stock that has more upside potential.
@@DJW007Yes, that's completely true aswell. Direct stock investing requires constant assessment of the assets. If the thesis and fundamentals don't play out, the answer might very well be to cut your losses.
You never even mentioned the SHARE BUYBACKS! Buying their own shares under $100.. 💥🍺💥🍺
Hi Jimmy,
Fantastic video. This is the one company I bought without much research. I just liked the business and bought it at 140 and 120. Was shocked that it dropped to 90+ because it was 200- at some point. Glad you made this in-depth video. Makes me feel that I'm gonna buy at these levels though I'm down about 30+% on this!! Cheers!
My favorite small cap right now is Aspen Aerogels (ASPN). Honestly might be the best small cap in the market in terms of potential.
ATKR stock is about to trade ex-dividend in two days. Atkore investors who purchase the stock on or after the 20th of August will not receive the dividend, which will be paid on the 30th of August.
Past performance is no guarantee of future results
Good video, I hope analyze another small caps $QLYS Qualys and $KNSL KINSALE
Saw another analysis where imports from mexico where a big concern they were relying on election results to help them out with buy america thing
With fed rates getting cut it can perhaps be a turn around with real estate company’s taking advantage of this cut to build more properties perhaps
It’s better to buy a commodity itself than buying a company that relies so much on commodity prices
Why??? What if the company is cheaper then where I should be trading compared to competition
Thanks Jimmy, good and deep analysis. I believe another good opportunity would SWK
Who are their direct competitors? Other electric comapnies are doing much better
Great to see you do a video on this one Jimmy. I’ve been bullish on ATKR for a long time and glad to see you’re seeing what I’m seeing. I also wanted to point out that, even on top of their great management team and capital allocation, their value proposition is absolutely solid. They’ve focused on the major pain points of their customers- contractors don’t want to get DELAYED on their projects waiting for multiple orders. They’ll pay a premium to avoid that. Atkore’s guiding statement is “one order, one invoice.” With a focus like that, they’ll win in this industry long term.
My favorite stock. Bought in ‘22 around $85 a share, sold most at the top around $170 last year, I’m doubling back down on this pullback. WIRE did great for me too before the buyout. This company is essential, under the radar.
good to see youtube retail investor buying this company
Hi Jimmy, I'm Pablo. I would ask you, what percent use you to calculate future revenue for the next five years?
Hi, thanks for the video, I saw that they have a short percentage on the stock as high as 17 percent, why is that, is there something we're missing?
I was planing to do a more research and dive in ATKR today
But since you did this videos you saved my time😂
Actually I wanna wait and see their anual report or I’m gonna need another dip🌚
I will continue to observe this stock
And I wanna thank you for making me better in investing really thanks a lot
Actually now I’m not buying ATKR
cuz my other investment went down and I would rather deploy my cash to bring my avg down in INTC and ULTA
Good basic ratios. I may look further at this one. Thanks.
Thank you for this video. According to yahoo finance site analysts are forecasting a negative revenue growth over the next 5 years.. why is that? Is it still a good long term investment?
Take a look at RGTI ,QBTS,IONQ , BRN and LTRX
I bought for 131$ recently and hold
Nice Jimmy ... loved it .. I had it on my shortlist
Please do more small caps
Looks like a solid industrial company
Very important tips
What about the debt ?
@@sebholding I looked at yahoo statistics. 3 billion market cap , 3.62 enterprise value. EV-MC = 620 million debt ?? Maybe I am missing something.
Hey Jimmy
That was smart! It was a good big picture too.
Great analysis Jimmy!
What happened Jimmy did you start pumping stocks?😅 I hope not , you have a great reputation
lol, I would never, I genuinely like this one over a full business cycle. My only real hesitation is are we at the bottom of the cycle? Probably not. But I’m afraid of timing the bottom so I figure I’ll take a piece here and maybe I can average down if it drops more. Otherwise I’m hoping for above average returns over the long run. 👍😀
Thanks J
It looks like Ternium (TX) could be even more undervalued in a similar cyclical industry (Curren Price 34 / Fair Value 60), please check it out Jimmy
They have lots of unusual items on their balance sheet
Great Company,
i would like to buy it,but there is 1 Problem as a German my broker doesnt even have the Stock in his list to buy......
Whaaaat???? I have a couple of German Brokers and they all have it! :)
Really interested video
Nice nice! keep comin Jimmy!
Atkr and bldr topbuild are multi baggers
Hmmm interesting.
Wow, I thought you were going to say Tilray. 😅
Hi Jimmy, serious question: were you compensated/rewarded in any way to promote this company on your channel?
I could ask you the same thing
I am pateron member so you may think I am biased but atkore is a company that we have been discussing in the community for quite sometime and it was a company suggested by a member and Jimmy really liked it we even a reasearch livestream on this way back just that it was overvalued at that time after the drop the discussion on this started again so we have been pushing him to make this video. So to answer your question NO I don't think he was paid to do this.
Thanks, that’s helpful.
Jimmy would never!
You can trusth Jimmy, he would neve take any compensation to promote companies
Davis Richard Perez Anthony Lewis Christopher
Finally!
Just don’t get bought out
THANK YOU JIMMY, CLOV STOCK WILL GO TO THE MOON IN SEPTEMBER. 💰😃💥
Such a wonderful video about salary negotiation 👏 Your content is impressive, but I noticed your thumbnails need some improvement. Since thumbnails are key to attracting viewers
I’d love to create a 🌟FREE thumbnail trial for your next video🌟 If you like it, we can discuss more. Looking forward to your response! 😊
Jimmy why are you so orange recently
Appreciate the video! Made a 10% profit in a week from your last recommendation, OMG!!! Considering NVDA45T, SHIBA, and AVAX. What do you think? NVDA45T looks promising, but I trust your analysis.
JUNK Stock. What a joke.
Care to elaborate?
@@sebholding profits rise and fall. Even if it’s a 8 p/e stock for the long haul it’s a bargain. At this moment it’s a below 7 p/e one. Whatcha gonna do when the US impose more tariffs for equipment? Even in this competitive environment the company can produce high returns. It will go to the moon when tariffs are imposed. The company can also introduce new products
Another pump and dump