brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 6, 2003
- Messages
- 18,085
Just looking to kick an idea around if you guys don't mind. I've been doing very well with companies that the market has left for dead lately, most recently MOVI. DLX certainly seems to be a candidate for some bottom fishing.
Deluxe is the largest check printer in the country. They sell their checks direct to consumers, via financial institutions, and to small businesses. Check volumes have been steadily declining in recent years, and this should continue for some time. In the meantime, DLX has expanded its range of products and services for small businesses and worked on cost efficiencies in the check business. They bough New England Business Services last year to bulk up their small business offerings, and the acquisition seems to be going well.
The company is trading pretty cheap. Looks to be approx. 12X forward earnings. DLX pays a fat dividend (~4%) which is amply covered by earnings. The company levered up to finance the NEBS acquisition, but will likely be paying down some of this debt in the next few years. They also have a history of large stock buybacks, which I think makes sense in a flat to declining business with fat cash flows. Buybacks are probably on hold for a year or two until they pay off some debt.
One odd thing I have ran across is that Eddy Lampert owns about 10% of the company. He is the guy who bought control of KMart as it came out of bankruptcy. He also effectively controls Autozone. In both cases, he bought into a sleepy, slow growth company and started basically shoving speed down its throat to charge up performance. As KMart and Autozone show, results have been pretty good under this strategy. It is unclear whether this will be the case with DLX, but the CEO has announced his retirement, so its hard to believe that they won't hire someone who will shake things up.
Any thoughts on this one? I know individual equities aren't everyone's cup of tea, but this one does sport a nice dividend and I think it is a big holding in DVY.
Deluxe is the largest check printer in the country. They sell their checks direct to consumers, via financial institutions, and to small businesses. Check volumes have been steadily declining in recent years, and this should continue for some time. In the meantime, DLX has expanded its range of products and services for small businesses and worked on cost efficiencies in the check business. They bough New England Business Services last year to bulk up their small business offerings, and the acquisition seems to be going well.
The company is trading pretty cheap. Looks to be approx. 12X forward earnings. DLX pays a fat dividend (~4%) which is amply covered by earnings. The company levered up to finance the NEBS acquisition, but will likely be paying down some of this debt in the next few years. They also have a history of large stock buybacks, which I think makes sense in a flat to declining business with fat cash flows. Buybacks are probably on hold for a year or two until they pay off some debt.
One odd thing I have ran across is that Eddy Lampert owns about 10% of the company. He is the guy who bought control of KMart as it came out of bankruptcy. He also effectively controls Autozone. In both cases, he bought into a sleepy, slow growth company and started basically shoving speed down its throat to charge up performance. As KMart and Autozone show, results have been pretty good under this strategy. It is unclear whether this will be the case with DLX, but the CEO has announced his retirement, so its hard to believe that they won't hire someone who will shake things up.
Any thoughts on this one? I know individual equities aren't everyone's cup of tea, but this one does sport a nice dividend and I think it is a big holding in DVY.