+ Watch GNTX
on My Watchlist
Designs, develops, manufactures and markets proprietary products employing electro-optic technology: automatic-dimming rearview automotive mirrors and fire protection products.
This is a truly wonderful business selling at a fair price. The company has a dominant 88% market share, which means that the company has a huge "economic moat," which should protect it for a long time. The company has a perfect balance sheet ($560 million in cash) and zero debt. It’s also consistently profitable - delivering double-digit profit margins and return on capital for over a decade. The company should grow at about 10% to 12% per annum over the next decade, which makes it a bargain at today's price of just over $17 per share. Also, a near-term catalyst that should drive the shares higher is the Kids Transformation Safety Act of 2007. It will require all new vehicles less than 10,000 lbs. in the United States to have a backup camera-based system by September 2014. There have been some delays in getting this Act passed; however, the final rule is currently expected by December 31, 2012. Investors wanting to profit from this need to start buying share soon.
very nice post
An interesting find. Although I am not comfortable with the 110M plus stock investment on the balance sheet. It is similar to an employee of a company investing in his or her own company stock. If the company gets hit then you lose your job plus your retirement. Likewise if economic contraction occurs a corporation loses earnings as well as assets on the balance sheet with these types of investments.Yet in spite of this GNTX definitely merits an inclusion on my long watch list.
Most of their investment is in bonds (less volatile). If the market continues doing well their stock investment will payoff immensely. Here is my article on seekingalpha:http://seekingalpha.com/article/939101-gentex-corp-a-wonderful-business-selling-for-a-fair-price
Thanks for putting this one on my radar!
With all of this fiscal cliff talk people have forgotten about this company. Its a special situation investment, in my opinion. This is a well run, undervalued business with a huge catalyst. It only makes sense to buy the stock.
It does not look like it will grow 10 % this year so why should it do this in the future? And even if it did grow 10 % a year the next 10 years, it is still more or less correctly priced at the current price level using a DCF-valuation, so why should this be such a great investment?
When people do a DCF analysis on a business they never take into account cash and debt on the balance sheet. This company has an enormous amount of cash and no debt. Did you take that into account? Did you take into account the law that is getting passed will require most vehicles to have backup camera-display systems by September 2014? Once this law get passed it will allow this company to grow even faster considering they have close to 100% share of this market. You took none of these things into account, you just ran a random DCF analysis and determined that the stock is fairly priced. I can run a DCF analysis on any company and say its fairly priced just by manipulating a few variables. That is not how you analyze a business. This is a special situation investment, which you would know if you actually understood this business.
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