Updated: Jan 23
I feel like we should talk about Zebra Technologies more, this company gets no hype. I get it, it is boring, it is not a "hyper-growth" name or story anymore. But, some of these "hyper-growth" names are reaching valuations I cannot really fathom anymore. The ability to gut volatility in my experience, make you a better investor. I have tried to time, and shave, etc, but in the end buying & holding is where it is at with conviction.
Hear me out though: Recovery Stock in 2021+
The company operations have two reportable revenue segments:
Asset Intelligence & Tracking (AIT): Barcode printing and asset tracking technology, products include: Barcode and card printers, services, location solutions, and retail solutions
Enterprise Visibility & Mobility (EVM): Automatic information and data capture solutions, products include: Mobile computing, data capture, RFID, and services and solutions
I admire the company's ability to start sourcing supply chain out of China, they have sourced to places like Taiwan, Vietnam, and Malaysia as highlighted in their last 10-Q. This was a goal of theirs as the trade war continued and supply chains were disrupted. Tariffs have not helped them either so the company took a slight margin hit over the last year. I think coming out of all of this, Zebra will do very well, and poised for more upside.
Reasons to be bullish on valuation:
Authorized $1b share repurchase program, but suspended share repurchases in Q2 and Q3 because of COVID. And they STILL crushed estimates (which were low to begin with) in Q3. They still have $753m in share repurchase as of Sept 26th 2020.https://www.barrons.com/articles/stock-buybacks-are-set-to-make-a-comeback-51607449014?mod=hp_LEADSUPP_2
I would assume that maybe not this current Q, but headed into Q1 and Q2 of next Fiscal year, as business starts ramping up again, they start buying back shares to juice bottom line making it look bargain like now. In a world where my other 4 companies have 0 profits lol. I like to have this company as balance. We are up over 110% on Cloudflare
Moving their supply chain out of China (for the most part) has given them a decent hit to their margins, but as they source from Taiwan, Vietnam, and Malaysia now, margins have room for improvement now that 1-time costs are out of the way somewhat. Tariffs have also hurt.
Management noted on the last call, that manufacturing continues to be the most impacted by COVID-19. Any recovery in that we will see in the next few quarters as they give us more color on that segment. Zebra can emerge stronger, capturing market share there. Again management notes "secular trends to digitize and automate workflows have accelerated….". Their acquisitions are also playing a greater role in
This is a name I would like to addd to on pullbacks. I wanted to go over what kind of account I am invested in and why.
My Roth IRA is my Growth Fund. I have been managing it since 2014, hence my return data. The reason I am aggressive and using this account is because it is tax-deferred when I turn 59.5, all the money I put in ($6,000 a year) has already been taxed. My goal is to grow this to $1,000,000 by 30. Aggressive goal, but we are well into the triple digits after this year. I do not use derivatives in this account, I am focused on long-term growth and promoting long-term growth to people I talk to and people who read my posts. Not having access to that money now, saves me from making irrational decisions I probably would in a taxable (although, the taxable account is doing very well too), but I do not keep track of that account. Maxing my Roth IRA every year is my goal before I reach a certain salary threshold.
I hope this clears a lot of things up!
I got a few emails from subscribers and some of the topics included Mining, Payments, and Freight. Companies negatively impacted by COVID that could turnaround (I obviously own ZBRA for this), but I can compile a list of a few more I think will do well. I also have a few questions surrounding small caps, and it is funny they asked that. Now that I have the Growth Fund set on cruise control. I want to dig deeper into the less-efficient market of small caps, 2021 I plan on doing more research in this area and compiling a list of 5 names I think could do well in small caps.
Let's get to work