But not this company. Even through the recession, which caused a dramatic slowdown in their end market, they've posted consistently strong profits. And as the economy recovers, their profits should begin to surpass their previous peak earnings.
Even without a recovery, the company is cheap at today's prices. After backing out the cash, the stock trades for less than two times normalized earnings, and the recovery should take that multiple even lower. Their ROIC is over 40% even in down years.
In other words, this is just the type of stock this newsletter looks for — strong business trading at a cheap price, with low risk and high upside.
We will buy the shares on Monday.
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