Given Past Gains in Similar Stocks, Excited to See Where This Goes
We’re about to add a new stock to our infrastructure screen. The screen has a history of delivering consistent multibagger returns.
Between 2012 and 2017, the GeoInvesting research team began building an infrastructure screen to track stocks that will benefit from certain industries upgrading their infrastructure, as well as the United States government’s goal to spend massive amounts of money by handing out contracts to U.S. companies to, according to the Bipartisan Infrastructure Deal fact sheet,
“…rebuild America’s roads, bridges and rails, expand access to clean drinking water, ensure every American has access to high-speed internet, tackle the climate crisis, advance environmental justice, and invest in communities that have too often been left behind.”
As I pointed out in my case study covering how a site visit to $SMID headquarters helped me make a decision to include that stock in GeoInvesting Model Portfolio, the returns across the entire screen have been rather remarkable to date.
The screen currently contains 20 stocks and sports a current average return per stock of 247.91%.
Over time, 8 stocks from the list made it to our Model Portfolios via 11 separate disclosures, together racking up a current price aggregate return of 2333.4%, or an average return of 326% per instance.
By the way, in the SMID study, I had actually made a small mistake, albeit to my favor, since Jacobs Engineering Group Inc. changed its symbol to from JEC to J, resulting in a bit more or a return for the stock (201.2% instead of 91.3%) and also accounting for one more multibagger, so 11 instead of 10. That’s a 55% multibagger hit rate. All but 3 are in positive territory, or 85% of the group.
And 3 have been acquired at large premiums to when we added the stocks to the list.
The majority of the stocks were added to the infrastructure screen in 2016/2017, and I think in a future update, a more expansive analysis of a larger tranche of solid infrastructure stocks is in order. But let’s focus on the now…
New Stock Coming
I am about to add another stock to our infrastructure screen due to a bullish interview I had with the CEO last week. Now that I have prequalified the company, the CEO will be introducing his growth story to our Premium investor network.
I am crazy excited about the new company we will be adding to the screen. Simply stated, this infrastructure play has just started benefiting from a two year upgrade cycle to its manufacturing facilities to incorporate robotics, allowing the company to generate more revenue at much higher margins and leading to a record backlog. Shares are trading at a P/E of around 6x to 7x, which we think will expand to a range of 10x to 15x over the next few years as the company continues to accelerate growth. This should easily lead to multibagger returns in the near and long term.
Pitch
Return Expectation: Short and long-term multi-bagger
Valuation: P/E less than 10
Themes
Infrastructure; Multibagger potential
Catalyst(s)
Infrastructure spending ramp up; Margin expansion; Manufacturing upgrades; Record backlog creates visibility
Industry
Structural Construction
Price, & Market Cap
>$3.00, >$150 million
Revenue
>$250 million per year
Don’t Take Our Word For It
Even though the $1.2 trillion infrastructure bill (Infrastructure Investment and Jobs Act) was passed by congress in November 2021 and money has yet to be aggressively released from this budget, we are getting clues that that time is nearing. For example SMID, the best performing stock on our infrastructure screen, at a 1,573% increase, just increased the size of one of its manufacturing facilities by 100%.
“North Carolina is one of the fastest-growing states regarding population and is utilizing the benefits of the Infrastructure Investment and Jobs Act passed by Congress to repair and expand highways and bridges for residents and travelers.”
The CEO of another company on our screen said:
“We started the year with very strong demand. Backlog has increased well above past norms and sales inquiries continue to be elevated, giving confidence that we should benefit from incremental U.S. government infrastructure funding.”
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Geoinvesting is a research platform founded in 2007 to publish premium research on microcap stocks that meet a certain set of criteria that we have proven leads to superior returns. Empirical evidence proves that investing in microcap stocks beats the returns of larger cap stocks by 8.24% per year. Even Warren Buffett and Peter Lynch have said that if they were to invest in one type of stock, it would be microcaps.
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