Airboss of America

This is a beautifully run company with revenues of $300 million per year. They are into anything rubber. The balance sheet has not changed in years and they recently increased the dividend. He thinks today’s current price is still expensive so would not buy it here. If you owned it for the dividends you should hold.

Rubber compounds, where they do conveyor belts, rubber automotive products, etc. The balance sheet is good, but they are in a state right now where nothing is really working their way. They are doing what they can. They are buying back shares, etc. and they still pay a dividend. Management has very little positive things to say right now. Until management improves, he wouldn't be too interested.

He thinks it might be bought out at some point. It will likely go up in 2018. It is a supplier into the oil industry among others. It probably won’t go down if there is a correction.

(A Top Pick June 24/16. Down 4.25%.) He pulled this after they had some pretty bad news and poor earning results. Management is doing the right thing by paying down debt and buying back shares. Their free cash flow is still fairly strong. He wouldn’t bother owning this until you saw some better outlook coming from management.

(A Top Pick April 28/16. Down 18%.) This has had quite a good history for 2-3 years, and got hit by the oil/gas sector, and a very, very slow defence buying in the US. This is still a Hold.

The biggest rubber compounder. They are sole supplier for all the chemical and biological resistant boots and gloves for the US and Canadian armed forces. They will benefit from the pickup in infrastructure spend. They also do rubber bushings for the auto industry. (Analysts’ target: $14.00).

Has always liked this, but they are still exposed to areas of the economy that are struggling. It is going through a transformation right now and there will be bumpy quarters along the road. We are going to see a turn around in US military spending, as well as elsewhere in the world.

It looks cheap here. It might be a value trap because the last couple of quarters have not been good. He is not adding but has not sold. He hopes things will start to turn in the next couple of quarters.

This does rubber compounding solutions, like repairing treads, conveyor belts, etc. They bought a defence products company recently. None of those businesses are really working out too well. This is more of a macro growth issue. He likes it from a value perspective, but now with the recent weak quarter and the management outlook, it hard to find much to like about the company. It could be used as a tax-loss sale, and look at returning in 6 months’ time when management outlook starts improving.

Had owned this in the past. Because of earnings, it continues to drop-down in rankings. The concern is with the defence spending and their contracts, which tend to be pretty lumpy. They’ve really come back of late. If he sees some increase in US military spending, there is probably some potential, but will probably be several quarters in the works. Strong management. Wait until you see their next quarter.

(A Top Pick June 24/16. Down 5.05%.) Does different types of rubber compounds for the self defence industry. A deeper value type of name, trading at 9X earnings. The recent quarter wasn’t great, and the next one probably won’t be overly exciting either. Things will eventually pick up, and he thinks it will move quite well when that happens. He still likes it.

This was a darling last fall and in the early part of this year, but has really sold off. A lot of that had to do with prospects for their business and the multiple that the market was paying. They are in rubber compounding and do a lot in defence, which will be where their uptake is in the next few years. With the US candidates’ comments, there is potential for bigger military and bigger military spend. The major shareholder on this is the CEO.

(A Top Pick Aug 5/15. Down 44.52%.) Was really surprised at how poorly this one had done. To a large degree he thinks it is the way the market is treating the stock.

(A Top Pick Aug 4/15. Down 41.02%.) This was disappointing. What he likes is good growth, good cash flow, high insider ownership and a nice little dividend. This company has it all. Had done very, very well and then hit some hiccups. Their costs went up and they were hit with the US$ currency. He is not giving up on this.