DORMAN PRODUCTS

Here is what they say about their company on the web site. https://www.dormanproducts.com/Pages/corporate/history.aspx

"New Since 1918", Dorman Products is a leading supplier of original equipment dealer "exclusive" automotive and heavy duty replacement parts, automotive hardware, brake parts, and fasteners to the Automotive and Heavy Vehicle Aftermarkets.  New to the Aftermarket is our exciting niche allowing us to provide hundreds of new products to our customers and end-users each month and thousands each year.”

Dorman is a supplier to the major automotive  retail parts outlets in the US. Domiciled in Colman Pennsylvania they also have a presence in Asia. 

Why I like it:

1. It has an 11% historic five year sales growth. 
2. A 13% Earnings per share rate of growth for the same 5 years.
3. Pre tax profit on sales is 18% and 19% earned on equity. 
4. It has zero debt and has a current price to earnings ratio of 19. 
5. It pays no dividend so is a growth not income stock.
6. It is just barely in the buy zone which is $43 - $65. Today’s price is : $61.14. Ticker symbol is DORM.

Consumer confidence is up and that may be detrimental to this stock that focuses on after market not new. It really needs lots of used cars. If people buy new then the parts business is slow. We will see.


Our Portfolio:

100 shares DORMAN INCORPORATED  01/01/2018 Cost $6,114 Value $6,114. 

Year End Report

Well we did good in our fantasy portfolio this year. Of course it was not rocket science this year with the markets at record highs you just needed to be in almost anything. The Dow Jones Industrial Average is up to date almost 25%. The S & P 500 a better gauge is up 19%.

In our portfolio of 12 stocks we had 8 winners and 4 losers. This was good but not as good as the overall markets. Our performance was 13%. We lost in oil, healthcare, and trucking. We won in aviation, retail, banking, housing, and used auto retail.

Our biggest gainer was Jones Lang LaSalle Incorporated. It gained 56%. This was our real estate nitch. Air lease Corporation was our runner up with a 27% gain.

Our biggest loser was in the oil equipment sector with Dril-Quip down 27%. It’s still a good company  going forward but just out of favor. $60 will help this one in 2018.

So here is what we did in 2017

AL cost basis $3,792.00 value is $4806.00 = $1024.00

DRQ cost basis $6,547.00 value is $4,755.00 = - $1,785.00

DNKN cost basis $5,273.00 value is $6,565.00 = $1,292.00

CGI cost basis $769.00 value is $635.00 = - $136.00

SRCL cost basis $7,719 value is $6,779.00= -939.00

LULU cost basis $6,855.00 value is $7,909.00 = $1,054.00

GNTX cost $1,856.00 current $2,105.00 = +250.00

BNS paid $5,408.00 value $6,463.00 = +$1,055.00

TSCO paid $6,667 value $7,521.00 = $854.00.00

KMX paid $5,444 value $6,541.00 = + $1,097.00

LCI paid $3,238 value $2,440.00 = - $798.00.00

JLL paid $9,699 value $15,081.00 = + $5,382.00

So our total gain was $8,331.00 or 13.16%.

We will start over in 2018. This is fun and educational for me. I hope it helps you.

Here’s what I am exploring for our next stock.

1. TOL or Toll Brothers a real estate business.
2. GLW or Corning Corporation an high tech and glass company. Make screens for iPhone X.
3. ALK or Alaska Air Group more than an airline also a major shipping source in Alaska.
4. PAYC or Paycom Solutions a payroll service company in OKC.
5. PZZA or Papa Johns International a Company in the political bullseye right now. Founder and CEO resigned, numbers lower, compitetion from companies like McDonald’s and Buffalo Wild Wings starting to deliver could cut into their pizza delivery. We will see. Speculation.

Last year we did one company a month. This year we will do two and select all 24 by July 1, 2018. 

Air Lease

We are going to add to our group of stocks (portfolio) this company Air Lease. It is a holding in both investment clubs. We have bought and added to this holding four times since September of 2016 in the Chickasha group. It has been stock pick of the month for three months.n

Why do we like this company?

1. It is a relatively new company with six years of history at above 30% growth in sales and earnings per share. 

2. They have 267 aircraft, 85 customers including many names you know and are in 51countries.

3. They lease planes.

4. The price is in the low of the buy zone.

5. They are the only company of their kind. Virtually no competition. 

6. They have lots of debt but debt goes with owning planes. They are leveraged strategically. 

We will buy 100 shares today @ $37.85.

  

AL cost basis $3,792.00 value is $3,803.00 = $11.00

DRQ cost basis $6,547.00 value is $5,232.00 = - $1,285.00

DNKN cost basis $5,273.00 value is $5,577.00 = $301.00

CGI cost basis $769.00 value is $455.00 = - $307.00

SRCL cost basis $7,719 value is $8,641.00= +$916.00

LULU cost basis $6,855.00 value is $5,288.00 = -$1576.00

GNTX cost $1,856.00 current $2,071.00 = +217.00

BNS paid $5,408.00 value $5,783.00 = +$382.00

TSCO paid $6,667 value $6,548.00 = - $119.00

KMX paid $5,444 value $6,035.00 = + $596.00

LCI paid $3,238 value $2,455.00 = - $770.50

JLL paid $9,699 value $11,275.00 = + $1,531.00

We took a major hit when drilquip reported this quarter and gave negative guidance for the rest of 2017. We have gone from being up over $3,000 to having a loss of $163.50. That loss is offset by some dividend payments but of course we are disappointed in the short term. At this point in the strategy I always take a look at the losers to make sure we are in the zone and prospects for the future are still acceptable. We will watch drilquip and LuLu closely but both still have great numbers. Some would argue to get out of oil and retail. I am contrarian enough to believe they are still good choices. We will see. CGI was our speculation but so cheap it is worth waiting to see what happens to NAFTA. They truck cars to and from Mexico. Could be a President Trump loss. 

Five More Winners

We will not buy these in the portfolio but these five companies are all great companies worthy of your consideration. All of them meet the Better Investing guidelines of our investment club community. We are looking for growth opportunities.

So here we go:




This bank is a major winner. Growing at great rates. With interest rates increasing this year the banking industry will be growing.



Maximus is a software company that caters to government portals and security. Will all the talk about secure email use among government leaders companies like Maximus are going to be attractive. It is already a successful company but will be on the grow.



Trex you have seen and it is not the dinosaur. No, they make non-wood decking materials sold at your local building and supply store. It is a system with lots of plans for your do-it-yourself project. They are growing a good rates. Buy this for long term.

Visa needs no explanation. I was surprised that the price of this stock was not in the Hold or Sell zone in the better investing scale. It is a buy and perhaps an opportunity to get in at a good time.
Try this and see what happens. Brand is hard to mimic. This one is here to stay. Buy. Buy. Buy.



You don't know this company officially but you really do know it. They make North Face, Wrangler, Lees and sell both in stores and online. They also have nautilus contracts with the NFL MLB and Harley Davidson. It is the oldest textile company in North Carolina dating back to the 1890's. Really. They are a winner except they pay too much of a dividend for the BI investment tolerance but I am fine with too much dividend for a company this old. They are still putting a lot of money into new product lines and research so it is still a growth play even though the dividend is awesome. It is a win/win to me. Just my opinion. Buy it.

Where we stand in our portfolio:


DRQ cost basis $6,547.00 value is $6,495

DNKN cost basis $5,273.00 value is $5,469.00 

CGI cost basis $769.00 value is $810.00 

SRCL cost basis $7,719 value is $8,293.00 

LULU cost basis $6,855.00 value is $6,532.00

GNTX cost $1,856.00 current $2,088.00 

BNS paid $5,408.00 value $6,129.00 

TSCO paid $6,667 value $7,117.00

KMX paid $5,444 value $6,583.00

LCI paid $3,238 value $2,290.00 

JLL paid $9,699 value $11,393.00

Three losers are DRQ, LULU, and LCI.

We are positive on the others with total gains of $3,731.00 or 6.27% since September. We will wait to buy any others for a little while although I am tempted to buy Visa now. We will wait for a pull back in the market and snatch these stocks. It is always good to study so you are ready when it is time to invest new dollars. 

Oil Will Be Back

Dril-Quip is like its name an equipment company for off shore drilling. It has weathered the oil downturn and is in less of a funk than its peers. I like this company long term. It is a good place to jump back into this industry.

The website www.dril-quip.comdescribes the company as:

"... one of the world’s leading manufacturers of offshore drilling and production equipment that is well suited for use in deepwater applications. 

The Company designs and manufactures subsea, surface and offshore rig equipment for use by oil and gas companies and drilling contractors in offshore areas throughout the world. Dril-Quip also provides technical advisory services, reconditioning services and running tools for use in connection with the installation and retrieval of its products. 

Headquartered in Houston, Texas, Dril-Quip has manufacturing facilities in the United States, Brazil, Scotland and Singapore. The Company also has sales and service offices in numerous locations throughout the world. Dril-Quip’s manufacturing operations are vertically integrated, with the Company performing essentially all of its forging, heat treating, machining, fabrication, inspection, assembly and testing at its own facilities. The Company has developed its broad line of subsea, surface and offshore rig equipment primarily through internal product development efforts. 

Dril-Quip is recognized for its full range of innovative drilling and production products that can be utilized to provide total solutions for offshore field developments."

This is a great investment opportunity. Here are the reasons:

1. It's rate of growth is the least reason for buying this company but an 8.6% growth in a low oil environment does not concern most. Most small capitalization companies Better Investing seeks a 12% growth rate. This is a small cap with $840 million in sales last year. It has no that is $0 in debt something remarkable for this industry. I made this a yes.

2. This company knocks it out of the park in pre-tax profit in comparison to its peers. That rate is 25.8% compared to 9% for the industry.

3. This company also is a winner in earnings on stockholders equity with a 13.29% exceeding by 1/4 th the industry that is at 8.4%. Impressive.

4. Earnings per share rate of growth is almost the same as sales which is ideal. The rate is 9.4%. A YES.

5. It is a true growth company that pays no dividend. A YES.

6. The upside-down side ratio is at a whopping 45. A BOLD YES.

7. Then to top it off the company is available in the low end of the buy scale at $65.20. The buy zone is between $59.80 - $92.70 so has great upside opportunity. Its 52 week high is $69.40 and that reflects the oil environment. The price was $121.10 the all time high with the low of $73.70 in the same year; 2013.

DRQ cost basis $6,547.00 value is $6,540 = - $7.00

DNKN cost basis $5,273.00 value is $5,543.00 = $270.00

CGI cost basis $769.00 value is $910.00 = +141.00 

SRCL cost basis $7,719 value is $7,783.00 = +$64.00 

LULU cost basis $6,855.00 value is $6,755.00 = -$100.00

GNTX cost $1,856.00 current $2,053.00 .... +197.00

BNS paid $5,408.00 value $6,192.00 = +$784.00

TSCO paid $6,667 value $7,354.00. = + $687.00

KMX paid $5,444 value $6,807.00 = + $1363.00

LCI paid $3,238 value $2,155 = - $1,083.00

JLL paid $9,699 value $11,329.00 = + $1,630.00

Looks like we now have a gain of $3,946 in our portfolio. That is almost a 7% return since September. Not bad. You can begin to see how this works. You just have to open a brokerage account and deposit funds. It can be an IRA traditional or roth. There are limits to what you can deposit in a retirement account so see your accountant or financial advisor to know your options. 

Martin Marietta an infrastructure stake

The Trump Administration is doing something Democrats have been seeking for 8 years and the republican congress has blocked it, namely infrastructure investment. This is one of the few things of which they can agree. Therefore stocks like Martin Marietta are an opportunity.

Martin Marietta, an American-based company and a member of the S&P 500 Index, is a leading supplier of aggregates and heavy building materials, with operations spanning 26 states, Canada, the Bahamas and the Caribbean Islands. Dedicated teams at Martin Marietta supply the resources for the roads, sidewalks and foundations on which we live. From their website. 

www.martinmarietta.com

It meets most of the Better Investing Criteria. Here we go:

1. Its sales have increased the last five years by 20% on just over 1 billion in sales making it a mid-capitalization company.
2. Pretax profit on sales is 8% which is above the industry average of 3%.
3. Earned on equity is 6% which is also above the average of 5%.
4. Earnings per share logs in at 25% for five years, very close to sales growth. That is healthy.
5. The upside/downside ratio is 2.8 to 1 which is low by .2 but probably acceptable considering the political climate.
6. The dividend is less than 1% so it is a true growth play making it a yes in BI standards.
7. The price is barely too high. It was at 230.91 per share yesterday. $141 - $237 is the buy range. So I would and we will wait for a correction befor buying this cream puff.

I would like to invest at the $200 spot. It may never get there.

FINANCIAL SPECULATIONS

FINANCIAL SPECULATIONS

David Dreman in his book on Contrarian Investment Strategies includes a chapter on the psychological aspects of investing and speculation created by a herd mentality.

He identifies four principles learned from financial speculations.

1. AN IRRESITABLE IMAGE OF INSTANT WEALTH DRAWS THE FINANCIAL CROWD TOGETHER.

2. A SOCIAL REALITY IS CREATED THAT BLINDS PEOPLE TO THE DANGERS OF THE MANIA.

3. THE MAGIC LANTERN SUDDENLY CHANGES AND ANXIETY REPLACES OVERCONFIDENCE.

4. WE DO NOT LEARN FROM THE PAST. THINGS DO SEEM VERY DIFFERENT EACH TIME, ALTHOUGH IN FACT EACH SET OF CIRCUMSTANCES IS REMARKABLY SIMILAR TO THE LAST.

Don't follow the crowd.

Three To Buy

Just something to consider. I did not do the homework but this is just observable in small towns in Oklahoma.


Birds of a feather flock together. That is true of companies as well. In small towns like Bristow, Oklahoma you will see one of our holdings, Tractor Supply in the same row with Hibbett Sports and Dollar Tree. Well are they doing well? You bet. All three are successful companies in a small town niche.

Hibbett is a buy right now and Dollar Tree has run up a little too much so we wait some for it to come back to reality. Investors know it's a win so they are paying a premium for it now.

I am not adding Hibbett to our fantasy portfolio because I only want 15 holdings. We perhaps could sell LCI and probably should. I still think healthcares' Trump bruise will turn skin tone in 2018 or sooner. So pride keeps me in LCI. Emotional. Not good but my stance. Time is always the test.

Well we are at a gain today of $3,149 or a 5.94% increase since September. Annualized that would be an awesome return. Don't count the chickens I have learned. Paper gain. We have a major loss in LCI and slight loss in DNKN.

So buy Hibbett!

A Slam Dunk

Dunkin' Donuts and Ice Cream

Sugar wins in our society. Donuts, Ice Cream and Latte are still winners and so is this company that is even more popular internationally than it is domestically. A little side note. Do you know the difference in an international and a global investment? You got it. Dunkin is global and Samsung is international. The difference is domicile. Dunkin is domiciled in the US but does business globally. Samsung however is domiciled in Korea, thus it is international to us. It would be global to Koreans.

The company has more than 20,000 Dunkin Donut and 7,600 Baskin Robbins restaurants in 40 countries. That is impressive.

1. Sales growth is 7% and is a small capitalization company with sales about $800 million. That is low but in the zone.

2. Pre-tax profit on sales is 25% and leads the industry.

3. It has earned on equity at a rate of 30.4%. It also leads the industry on this statistic.

4. Earnings per share is high with 30.4%. It's ok in my opinion.

5. The stock has a 4.4 to 1 upside downside ratio.

6. It also is in the high of the buy zone.

We will buy 100 shares today at $5,273.00

DNKN cost basis $5,273.00 value is $5,146.00 = - $127.00 (01/08/2017) update. 
CGI cost basis $769.00 value is $865.00 = +96.00 
STRC cost basis $7,719 value is $7,938.00 = +$219.00 
LULU cost basis $6,855.00 value is $6,827.00 = -$28.00
GNTX cost $1,856.00 current $2,052.00 .... +196.00
BNS paid $5,408.00 value $5,788.00 = +$380.00
TSCO paid $6,667 value $7,516.00. = + $849.00
KMX paid $5,444 value $6,540.00 = + $1096.00
LCI paid $3,238 value $2,225 = - $1,013.00
JLL paid $9,699 value $10,673.00 = + $974.00

Looks like a gain of $2,642 since September. That is a 4.99% return in a quarter. Not bad annualized. We will see. LCI is still hurting our portfolio. LULU and DNKN are too new. WE will stop at 15 shares.