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The Motley Portfolio's 3 New Best Buys Now

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November 09, 2012 – Comments (2) | RELATED TICKERS: GLF , JOY , PNRA

It’s that time again folks; here are my favorite ideas for new money today from the 23 holdings in my Motley Portfolio. Remember you can see all the holdings and more right here: http://www.fool.com/specials/realmoneyports/real-money-portfolios-jason-moser.aspx

GulfMark Offshore (NYSE: GLF)

With oil prices hovering around $85 per barrel GulfMark Offshore has seen a bit of a lull in activity which is the time to really look closely at companies like these. Yes, it’s somewhat levered to the price of oil and activity around the globe, but GulfMark also provides a great value to many of the larger E&Ps with its fleet of vessels.

Earnings recently came out and GulfMark missed expectations on revenue and EPS. Further management mentioned that they see challenging conditions for the coming months. The North Sea region saw revenue fall and utilization remain flat thanks to a slower than anticipated summer. In the Southeast Asia region revenue was up 17% thanks to higher day rates and utilization. And the Americas region saw revenue tick down slightly thanks to declines in utilization. Add in the fact that the company brought forward some drydocking planned for later in the year and the stock is facing some challenges today which is the perfect time for longer-term buyers to step into the picture. When demand comes back around (and I’m confident it will), GulfMark should be a very rewarding holding.

Joy Global (NYSE: JOY)

Joy Global is a great example of a business very much tied to commodity activity. As a major equipment supplier to miners (coal in particular), when the global economic engine slows, so do companies like Joy. Looking at it from a broader lens however, coal will still play a very important role in many emerging economies as fuel for energy and infrastructure development. In fact the long-term picture for India, China, and other non-OECD nations is still very positive as these countries will continue with their industrialization and U.S. coal producers are investing today to double their capacities to export coal into seaborne markets.

CEO Mike Sutherlin has done a great job as under his watch revenue has more than doubled and net income is up 158%. The balance sheet remains in excellent shape with $450 million in cash versus $1.6 billion in debt which is more than easily serviced by operating earnings almost 20 times over. And it’s also worth mentioning at least the continued chatter of Joy as a possible acquisition target. So whether the company continues to generate value for shareholders or gets bought out at a premium by a bigger player, today’s price for Joy Global marks an extremely attractive risk/reward proposition.

Panera Bread (Nasdaq: PNRA)

It’s tough to add to your winners. Many times when you buy a stock and it goes straight up it’s easy to fall into the trap of thinking, “Well, that’s done, no reason to add more now.” Granted this is obviously a nice problem to have (stocks going up that is), the bottom line is that when you find a quality business with growth prospects, adding to a winning position can be the most rewarding thing you can do. And that’s what I’m doing today with Panera Bread.

With 3Q2012 earnings just out, Panera’s EPS of $1.24 beat estimates of $1.19 handily on revenue of $530 million for the quarter, which represented 17% growth in revenue and 28% growth in EPS. Margins are improving and average weekly sales grew 14% on a system-wide basis. Management maintains its focus on four primary initiatives: Improving food quality; marketing and the MyPanera loyalty program; growth in the catering business; and operational improvement. These are key points I believe which will help generate long-term value for shareholders. And to top it off, with a store presence of 1,625 bakery-cafes today, there is still plenty of room to grow the footprint. At 30 times trailing earnings the stock may look expensive to some, however on a forward basis it trades at a more appetizing 23 times earnings. Panera truly requires the investor to keep focused on the long-term story and if shares happen to take a hit later on due to shorter-term concerns, don’t be surprised to see Panera make this list again.

2 Comments – Post Your Own

#1) On November 09, 2012 at 1:26 PM, Mega (99.96) wrote:

Have you tried the $17 lobster sandwich at Panera? That has to have pretty good margins.

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#2) On November 09, 2012 at 5:01 PM, TMFJMo (70.01) wrote:

Hehe...no I haven't tried that one yet. I gotta believe you're right though. I love their sandwiches and bagels and just recently came to the realization that they have a pretty killer selection of salads too if you're ever trying to eat a little light.

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