Why I’m Always Looking for Oddballs
Wednesday, April 4th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential
It all comes down to owning the right stocks. Sure, it helps to have a roaring bull market at your back, but major market moves don’t happen all that often. Consider the Internet sector driving technology stocks into a major bubble just a few short years ago. Sometimes, the best investments turn out to be oddball companies. I’ve always contended that the best portfolio an investor can own is a basket of “special situation” stocks.
Consider Daktronics Inc. (NASDAQ/DAKT). Who would have thought that a company that makes scoreboards and road signs could be such a wealth creator? No investor I’ve known has ever said, “I wonder if there are any good scoreboard companies to invest in?”
Really, Daktronics isn’t a very exciting company. The stock’s up about tenfold in ten years. It reminds me of Huron Consulting (NASDAQ/HURN).
As I said, I love oddball companies. I want to own oddball companies that I think institutional investors will be interested in. VCA Antech (NASDAQ/WOOF) also comes to mind. I don’t want to own the flavor of the month.
One new company that I like is called ICO Inc. (NASDAQ/ICOC). Now there’s a company name that jumps out and grabs your attention! ICO Inc. Here’s a company that’s more interested in making money than grabbing the spotlight.
The company is small, but it is very successful at selling specialty resins and concentrates, which are used to manufacture household items like furniture, toys, auto parts, agricultural products, paints and coatings. This company, founded in 1978, is based in Houston with 18 facilities in 9 countries. The company sells its products mainly to chemical companies, polymer production affiliates of oil exploration, and production companies, as well as manufacturers of all kinds of plastics.
In its fiscal first quarter ended December 31, 2006, the company’s revenues grew 15% to $86.3 million. Net income was $2.5 million, or $0.09 per fully diluted share.
Not too many people follow resin prices, but they are going up. ICO is currently experiencing higher product sales, and it expects solid organic growth going forward.
ICO’s growth isn’t earth shattering, but the stock is reasonably priced on the market, and the company has experienced a real turnaround since 2000. ICO is an oddball kind of company, but in this market, it’s exactly the kind of small company I’m looking for.
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Tags: bull market, institutional investors, investment strategies
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.



