Mitel has was long relegated to obscurity within the institutional investment community. However, the discussion in this series of episodes will broadly portray what we find are Mitel’s underappreciated competitive strengths. In episode 39, we first lay out how Mitel came to be a major, if little known, player in providing cloud telephony services to businesses.
Realty Income has a diversified portfolio by sectors within the single parcel commercial property market. What are the risks of each sector, and how does management approach each?
Realty Income operates in a commoditized industry, the ownership of standalone real estate parcels used by certain commercial retail enterprises. In this podcast, we discuss how Realty Income structures its business to provide diversification and attempts to differentiate its offering.
Demand for MEMS microphones increased greatly when Apple put four microphones into the iPhone7. What might further stimulate the worl's appetite for MEMS microphones? In this podcast, Stocks in Depth discusses potential for new technologies like the internet of things (think Alexa) and 5G networks (think machine-to-machine communications) that might continue to cause MEMS microphones to proliferate.
Knowles two most important businesses, MEMS microphones and hearing aid components, share a common theme of eroding market dominance. But, management has devoted a large percentage of revenue into R&D that might address new developments. In Part 2 of this podcast on Knowles, we discuss how Knowles has positioned itself to capture new sources of demand from the internet of things (IoT), and how it has addressed greenfield needs in hearables, e.g. small earbuds, which require distributed proce...
Knowles Corp. has suffered mightily since its spinoff from Dover Corp. in early 2014, mostly from the disastrous acquisition of Sound Solutions. MEMS penetration of smartphones, currently around 1.7 globally compared to 4 per iPhone, can continue to rise, since this statistic is nearer to one mike per phone outside of Apple. GARP Research has published a major report on artificial intelligence earlier in 2017, part of which discusses advancements in speech recognition. Amazon's Echo / Dot makes ...
Donald Trump is about to be inaugurated as the 45th president of the United States. As far as we can tell, every other country in the world advances a self-serving industrial policy, to the detriment of the United States, which embraces free trade. In this final episode of Stocks-in-Depth’s review of Ian Fletcher’s 2010-2011 book, Free Trade Doesn’t Work , we start by presenting the author’s case that China, Japan, and Europe have emphasized industrial policy over free trade for years. Fletcher’...
Institutional investment strategists follow economic and market data closely, and tend to weave together a narrative that explains the current trend. Presently the US dollar is rising, like it has two times before in the last few decades. In this podcast, we sample the perspective of Brown Brothers Harriman currency strategist Marc Chandler, whom we believe mistakenly thinks the rising dollar is proof that the U.S. trade deficit is benign. In Part 3 of our series, Free Trade Doesn’t Work ,” Stoc...
The historical record shows that countries that rise to economic greatness did so through a strong industrial policy, which incorporates tariffs and non-trade barriers. Moreover, at their apex these powers tended to adopt free trade, some vainly thinking that in doing so they might change the world for the better, but nevertheless be able to kick away the ladder upon which others might follow to industrial might. In Part 2 of this special edition of Stocks-in-Depth, we review what economist Ian ...
History is replete with unanticipated events: Pearl Harbor, the dismantling of the Berlin Wall, the 2008 credit meltdown, and now the improbable ascendance of Donald Trump to America’s highest office. Yet there are many who previse change, but whose ideas are so unorthodox that they are never see the light of day until after the fact. With this in mind, Stocks-in-Depth introduces a little known economist, Ian Fletcher, and his 2010/2011 book, Free Trade Doesn’t Work: What Should Replace It and W...
When we first examined the home standby generator market, we were struck by what seems to be a unanimity of opinion that tremendous secular growth would be driven by homeowners increasingly discovering the benefits of having an automated system to supply electric power in times of outages. It’s argued that penetration is low, and that loss of power is not only inconvenient, but uneconomic, for food spoils and families must seek alternative shelter. Yet as we looked into the matter, we saw that t...
Generac astutely commandeered the clear leadership position in home standby generators during the late 1990s and after the start of the millennium. In so doing, it developed an expertise in engines optimized for burning natural gas or propane, such as its 2-cylinder OVHI 1,000 cc displacement engine that can deliver 16 kW of standby power, as well as by making transfer switches and other related technologies. Moreover, it has structured its supply chain to optimize a position as an “asset light”...
For at least a decade, Generac's strategy has been to leverage off of its clear leadership in the home standby generator market to establish market share in portable generators, power washers, and commercial & industrial standby electricity generation markets. How successful has it been? How profitable can these adjacencies be? What other companies have done well? What has happened to the poorer performers in the marketplace?
Generac has seen its sales and earnings decline for over two years. Four powerful storms swept across the U.S. in the 2011-2012 period, but ever since then electric power outages have been well below normal. In Part 1 of our discussion of Generac, we'll cover what businesses this company runs, and what management's strategy is. We will have to stop and resume the discussion in Part 2, but you will start to see how our granular approach of deconsolidating and estimating sales and earnings within ...
Central Garden & Pet contains numerous distinct businesses within its two namesake segments. In part 3 of this podcast, we spend nearly two hours breaking down the pieces within these segments, and provide granularity so you can appreciate how various rivals compete in each niche. Along the way, we explode the myth that dog food market, in which Central doesn't have much of a presence, has unappetizing growth and profitability. "Big dog food" is also the principal actor in the treat sector, ...
In Part 2 of the Central Garden & Pet podcast, we continue to review the operations of the company beginning with portions of the Pet segment, mainly Aquatics, Flea & Tick products, calming products, equine, and the professional and special ingredients businesses. We discuss the Garden segment, especially controls. Given some of the pieces of the Garden segment seem to have good profit margins, we explore why the other portions of this segment have thin margins, and what actions incoming...
In Part 1 of this three-part podcast, we start by presenting some background on Central Garden & Pet, and we discuss management changes over the last few years that have affected the company’s strategy. We draw comparisons in our analysis to other consumer product firms, and discuss management’s ability to achieve acceptable levels of ROI in its two segments. After this high-level discussion, we take a detailed tour of many of the businesses in its Pet segment, which depending upon the varia...
In this podcast, we examine what has caused growth in outerwear, sportswear, and footwear to accelerate since the 2008 credit crisis for key players such as Columbia, North Face, and other brands. These leading firms have harnessed the opportunity to use outlet stores and e-commerce to redefine their relationship with their customers and retailers, and in so doing have increased their penetration of these essential apparel markets. Coming out of the 2008 meltdown, we recount the grotesquely mass...
In Part 1 of our podcast of analysis of Power Integrations' stock, we laid out how we saw it fitting in to stock market trends we've seen in 2016, which have been changing from the pattern followed since the credit crisis of 2008-2009. This company has suffered from stagnant sales and compressed margins. However, our methodology is to consider long-term trends and corporate milestones, and we think Power Integrations is beginning another such cycle, even if such episodes have in the past not bee...
The last major milestone for Power Integrations was its release of LinkSwitch2 in late 2008 to early 2009. LinkSwitch , by our estimate, is the company's leading product family. However, management stopped reporting sales by product about five years ago. In this stock research podcast, GARP discusses a wide range of subjects pertaining to this niche semiconductor enterprise. We aim to demystify the engineering breakthroughs it has achieved, including its latest, InnoSwitch , which is beginning t...
How much organic growth is really occurring at RealPage? Is the apartment rental market going to become swamped by capacity? How profitable is RealPage really, considering that it discusses its results with institutional holders in non-GAAP terms? What does it look like using more conventional yardsticks? Is there a large market waiting for it and Yardi to penetrate? In this podcast of this lesser known stock market listing, GARP Research attempts to unpack these questions through walking listen...
Vocera Communications is dearly valued relative to its present level of sales and red ink has been flowing for several years. However, 2015 has been a transformational year. Sales have started to grow and the losses are attenuating. A few years back it was largely dependent upon communications "badges" largely worn by nurses in hospitals, and it was challenged by new text messaging technologies. With a fair amount of development spending and some well-conceived, financially reasonable acquisitio...
Shares of Taser International (TASR) retreated dramatically ever since the riots in Ferguson, MO dominated the headlines in early 2015, about one year ago. Is the decline because of fundamental factors such as Motorola's decision to enter the body cam and evidence management business, or is it more from the passage of an unpleasant psychological milestone in race relations? Are international cities rethinking their need for conductive electric weapons or body cameras in the wake of the European ...
In part 1 of our discussion of Taser International stock, we explore how there are two segments. Its conductive electronic weapons (CEWs) enjoy extraordinarily high profitability with mid-30's operating margins fully burdened, and competition barely exists. The other segment is Axon, which contains its emerging evidence.com cloud-based evidence management system, which reduces paperwork for police officers, helps manage the multi-million dollar risks of large civil settlements, and organizes cas...
In part 2 of this stock research podcast discussing Entellus Medical, we explore the rough an tumble world of how rivals in the medical device industry can vary from raising a hundred million dollars for companies that wind up having minimal revenues and fail, to the foibles of industry giants such as Johnson and Johnson, which can be outwitted by small, nimble competitors such as Entellus Medical. We also share with you the lurid side of small companies that raise capital from investors who thi...
Entellus Medical came public in January 2015 under the premise that it was the leader in office-based balloon sinus dilation, which was a small but increasingly preferred niche compares to FESS operations performed in hospitals. The investment research discussed in this podcast examines whether changes in medicare reimbursement may have been a setback that favored hybrid-FESS procedures, and how steroid implants may have temporarily affected what seemed to be an inevitable shift to treating chro...
Institutional investors have heard the story that unified communications is under-penetrated, and that soon most businesses will want to buy Plantronics' headsets that incorporate software compatible with Microsoft's Skype for Business cloud-based platform for office workers. Why has penetration stalled at a fraction of where consultants thought it would have been already? This stock research podcast provides equity analysis of Plantronics, and discusses why the penetration rate of unified commu...
Three players are preeminent in the field of precision navigation: Trimble, Hexagon, and Topcon. Is the competitive dynamic stabilizing? How are managements dealing with slower revenue growth, and does this mean that end markets are much more penetrated than before? How rapidly can adoption of building information management (BIM) take place? What are the implications for profitability going forward?
Trimble Navigation's high-margin geospatial business and its precision navigation systems for farm use have slumped as the dollar has pressured commodities markets. But the company continues to grow in building information modeling (BIM) software and in mobile solutions for truckers and other fleets and work forces. Management is seeking to improve profitability, and heavy investment in new features make its precision location software more indispensable. As technology continues to advance rapid...
We described in Part 1 how Cree, Inc. ramped up its headcount in its LED fabrication operation during the major up-cycle that occurred from 2006 through 2010. Although fewer bodies have been added since then, there's "only" been a 10% reduction in corporate headcount since the all-time peak in fiscal 2014, and LED sales are now back to where they were before fiscal 2010. Although Cree has changed course to emphasize lighting fixtures, the company still suffers from low gross margins and excessiv...
