Stephen Groff Allison Transmission Holdings ALSN-N BUY Jul 12, 2018

Generating very high returns, very high margins, and a lot of cash flow. You have to look at free cash flow on this, because they have everything from NOLs meaning that they convert higher percentages of revenue of EBITDA into cash flow. Margins are very high, north of 30%, because a lot of technology goes into making heavy-duty applications for everything from garbage trucks to school buses. Dividend yield of 2.17%.

(A Top Pick April 20/16. Up 1.21%.) He is fully aware that some of their end markets are challenged. He owns this because of the cash flow it generates, and believes in the long-term value its products provide.

He still likes and owns it. Some businesses have been challenged and some are doing well. At some point you burn through heavy duty transmissions and they have to be replaced. The conversion to electric vehicles will require capital expenditures on the part of these companies.

(A Top Pick April 20/16. Up 34%.) This tends to specialize on medium/heavy duty size automatic transmissions that go into things like school buses, refuse trucks, etc. This is a cash flow machine. It was very cheap a year ago and is still attractive, but not inexpensive. Still a great company.