This month's newsletter pick is growing at over 10% per year, year after year. Even better, the company has gross margins over 75%, so that growth can throw of tons of cash flow. For years, investors didn't see any of that profit, as management decided to pay it all out to themselves in the form of huge salaries and bonuses. That all changed at the beginning of this year, when an up and coming value investor took control of the board and booted the old management team. The new management team has proven very effective, as they've continued to grow the business at a rapid clip while taking out all of those excess costs.
The company has already announced their looking for strategic alternatives. Given all of the variables in play and the long runway for potential growth, it's not unreasonable to think about a buyout coming in at well over 2x today's share price.
We will buy the shares on Monday.
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The pick for December has a market cap closing in on $1 billion dollars, with sales in excess of $2 billion dollars. The company's profits are consistent. The company plays a vital role in the electronics manufacturing industry.
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