Could Cubic Be a Great Long-Term Investment?

In the video below, Motley Fool industrials analyst Blake Bos takes a dive into Cubic  (NYSE: CUB  ) , and examines whether this is a stock that belongs in your portfolio for the long term. He discusses the enormous amount of transportation projects the company has worldwide, as well as its mission support and defense systems businesses that focus on military education and training. He also tells us why the stock might be depressed at the moment, which could make it an attractive buy. In addition, Blake explores the potential downsides to the stock, including why inside ownership is so low and suggests that the stock is worth a second look at today's prices.

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  • Report this Comment On June 19, 2013, at 10:16 PM, golfer154 wrote:

    There was one really bad part of this analysis. The guy kept talking about the CEO's 25% ownership.

    But if he would have followed the company, he would know that the founder passed away several months ago, and those shares were sold.

    Out of date analysis.

  • Report this Comment On June 20, 2013, at 10:01 AM, TMFBos wrote:

    @golfer

    I was referring to the Chairman in the video so apologies about the confusion around the CEO. I show Zable still has a huge holding in the company even after his death, but it does look like whoever is responsible for his assets has been selling off a large amount of shares in secondary offerings. I'll be doing another video on compensation and a few other criteria to see if Cubic is really a good portfolio candidate for investors and will be touching on Zable. This was just an initial assessment of the company. Thanks for commenting, definitely a faux pas on my part for not including Zable's death.

    Cheers,

    Blake

  • Report this Comment On June 20, 2013, at 1:22 PM, golfer154 wrote:

    Thanks for the clarification, Blake. I do think Cubic is a good company. It seems to continually beat analysts estimates on both revenue and eps.

    The loss of their 97 year old founder might also unleash some creativity for the good.

  • Report this Comment On July 10, 2013, at 1:19 AM, brittplmvp wrote:

    Blake, I have been a follower and stock investor in this company for well over 20 years. In the event you have not yet made the full Founder/Ownership connection I can fill in a few gaps. Walter J. Zable was the Corp. founder, active CEO and the majority shareholder up until his death in June 2012. His son, Walter C. Zable, Jr., was the president of the transportation segment (CTS) before his father's death. Since the passing of Zable Sr., Cubic Corp's Chairman of the Board seat was delegated to Zable Jr. More recently, Cubic has internally promoted a new Corp. CEO, and appointed a new Defense Applications segment (CDA) President. It's been well publicized, the Zable family's goals are to maintain an ownership position in their father's company. Also well publicized, were the anticipated secondary offerings presumably necessary to cover any estate related obligations. In this respect, my personal view of current ownership would naturally include the form of at least one Trust. Although currently not my ideal ownership or foundation model for future growth, Zable Sr. well diversified and protected his Corp. earnings against extreme swings with 2 disconnected and disctint segments: Defense (govt) and Tansportation (public). Over the years, former Cubic CEO's have relayed on many occassions to investors, deep interest by larger corp's to aquire or to partner in ventures with Cubic. Most, predicatably were answered with a resounding NO by it's founder. Speculation, and predictably, more aquisition offers will likely continue onto the reigning Board of Directors. Ownership aside, my personal view of future company growth potential in both of their global business segments, defense training and simulations, and mass transit systems is a good long term

    investment.

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