Two Stocks for 2020
Last year at his time, I described two under the radar
stocks that I thought would outperform in 2019. Automatic Data
Processing (ADP), which returned 35% for the year, and Motorola
Solutions (MSI), which rose 42%.
by those results, here are two new picks for 2020. One is a relatively
recent IPO that few have yet noticed. The second is a 100 year-old firm
left for dead by most market players.
New Oil and Natural Gas Resource Owner
Minerals (MNRL), an April 2019 IPO, was founded in 2012 to acquire
mineral and royalty interests in oil and gas shale properties that
Brigham would lease to third-party operators. The advantage of that
approach is that Brigham doesn’t have to spend cash developing wells. To
date, Brigham has acquired interests in more than 74,000 acres in major
U.S. oil and gas producing areas including the Permian and Anadarko
basins in Texas, Oklahoma, and New Mexico.
in fast-growth mode. September quarter revenues were up 34% vs. year-ago
and analysts are forecasting 37% revenue growth over the next 12-months.
Brigham declared its first quarterly dividend; $0.33 per share, which
equates to a 6.3%
dividend yield. Further, at least one analyst is looking for $0.39 per
share dividends by this time next year.
100 Year-Old Firm Left for Dead
Pitney Bowes (PBI) was founded in 1920 to provide postage
meters to businesses, thereby giving them a tool for mailing letters
without having to buy stamps. Obviously, that market is dwindling.
So, it’s understandable why most market players are
shunning Pitney, as evidenced by last year’s whopping 56% share price
In fact, Pitney Bowes sales peaked in 2008 at $6.3
billion, and by 2016, had dropped by 53% to $3.0 billion. Earnings
followed a similar path, sinking to $0.40 per share in 2016 from around
$2.00 per share in 2008. But there’s more to this story.
Pitney recently embarked on a turnaround program,
introducing new products relevant to current market needs. For instance,
one of its new SendPro applications allows parcel shippers to compare
UPS, FedEx and USPS shipping rates and schedules, and then schedule
shipments with the most appropriate shipper. That’s just one example of
several digital commerce products that Pitney has recently introduced.
Those new products are starting to make a difference.
September quarter revenues (excluding discontinued products) rose 6% vs.
year-ago. But analysts haven’t noticed. Most are forecasting little or
no earnings or revenue growth for 2020.
That’s good news because those low expectations mean that
Pitney is unlikely to miss analyst forecasts and a significant beat
could send its share price up. However, you may have to wait for its
March quarter report to see that happen. But you’ll get paid to wait.
Pitney is paying a 5.0% dividend yield.
Those are my ideas. But, do you own due diligence. The
more you know about your stocks, the better your results.