If you're anything like me, you're always looking for stock ideas. To get a few fresh ideas I asked three Motley Fool analysts to name one stock they like right now. Read on for the three stocks … and let us know one stock you like right now by using the comments section below!
Alex Pape, Motley Fool analyst:
If you've ever spent a snowy day in inappropriate (and probably soggy) footwear, you understand the value of a good pair of boots. Timberland (NYSE: TBL) also understands their value: Since it took its current name in 1978, the company has sold enough boots to grow its market cap to more than $1 billion earlier this year before falling back in the recent correction.
Over that time, the company has developed a two-pronged reputation. First, its boots are known for ruggedness and durability, qualities that nearly immunize Timberland from the ever-changing fashion winds that plague competitors such as Deckers Outdoor (Nasdaq: DECK), maker of the fashion-sensitive UGG and Teva lines. Second, the company has established itself as an exemplar of corporate social and environmental responsibility, up there with Whole Foods and Starbucks.
Management at Timberland is top-notch. And by management, we're talking about the Swartz family. Current CEO Jeffrey Swartz is a third-generation CEO; his grandfather was the first to sell boots under the Timberland brand name over three decades ago, and Jeffrey's father, Sidney, is a former CEO and remains chairman. In addition to the family experience, the two Swartzes together own a quarter of the company, which makes me comfortable that their interests are the same as those of other shareholders.
On the down side, Timberland has been bleeding revenue over the past few years. Judging from the current share price, investors seem to have written the company off as being in permanent decline. True, the past few years have been unpleasant for Timberland, but the company has also faced a perfect storm of unusually high leather and rubber prices, disproportionately high unemployment among work-boot customers, and a failed restructuring of product lines.
Now, input prices are in more normal ranges, unemployment is slowly beginning to turn, and the company is reorganized with clear goals in mind. Despite what the market says, this brand isn't going anywhere, and today's depressed price around $16 allows for an excellent buy-in price for a great company.
Bryan Hinmon, Motley Fool analyst:
Treading down the market cap ladder and dabbling in some micro-cap stocks can lead to finding some bargains. One micro-cap stock I like right now is Sharps Compliance. Sharps has pioneered a profitable solution to dispose of used needles and other medical waste via mail. In doing so, it caters to an underserved market and over time has come to dominate this niche. Imagine how profitable your garbage company would be if you had to pay to mail in your trash each week!
Sharps leaves the hospital waste collection to big boys Waste Management (NYSE: WM) and Stericycle (Nasdaq: SRCL) and instead focuses on smaller fish, including homes, small clinics, and businesses in the hospitality industry (all of which generate a surprising amount of medical waste). Sharps has some valuable patents and know-how, a great distribution network, and sweet deals with the USPS and parcel carriers that give it great protection from new entrants. In addition, not too many upstarts are stoked about getting stuck with used needles or covered in other, equally unpleasant, medical waste.
A big new government contract gives credence to the company's business model. All the while, Sharps can be purchased near its 52-week low for only three-and-a-half times the cash on its books -- and it doesn't have any debt!
Jason Moser, Motley Fool analyst:
One stock that I like right now (and it seems like always) is Markel (NYSE: MKL). In looking past all of the suggestions that the company is like a mini-Berkshire Hathaway, I came out of the Markel annual meeting this year more convinced than ever that this is a company that is truly focused on increasing shareholder value.
Quite simply, an investment in Markel is an investment in its culture. The company has done a phenomenal job at growing book value over the years. Since its public offering in 1986, the company has grown book value at a compound annual rate of 21.2%, and at the end of the first quarter of this year, the company's book value hit a record high of $296 per share.
Perhaps the most interesting development of late is the introduction of Markel Ventures, a unit that seeks and buys small businesses. Aimed at creating value and diversity within the company's operations, CIO Tom Gayner stated that the goal of Markel Ventures is simple: To find profitable small businesses with high returns on equity and exceptional management that offer growth and discipline at a fair price. Sounds like a page from the old Buffett book of wisdom for sure, and with a market cap of $3.4 billion, Markel still has a lot of room to run.
What are your thoughts on these three stocks? Weigh in using the comments section below.
