Harry Domash's Winning Investing

HOME  MARKET WORKSHOP  STOCK ANALYSIS CHECKLIST  MARKET GLOSSARY

BASIC TRAINING  BEST INVESTING SITES  DEATH LIST FREE TUTORIALS

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%.  

Encouraged 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

Brigham 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.

Brigham is 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. In August, 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 drop.

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.

1/7/20

Questions or comments about this site: click here

Winning Investing

199 Quail Run Road  Aptos, CA 95003

(Aptos is 'the beach' for Silicon Valley)

(800) 276-7721    (831) 685-1932   

 Popular Dividend Detective Links
Free Cash Flow: Best & Worst Monthly Dividend Stocks
 Preferred Stocks Best Closed-End Funds

About Harry Domash

Click here to read a recent interview.