When Holding Can Make as Much as Trading
Over the years, I’ve found that it pays to stick with great companies. Finding them is difficult, but when you do, they can make as much or more than trading stocks for a living.
One company that I’ve always admired is Daktronics Inc. (NASDAQ/DAKT). This company builds the sophisticated scoreboards for stadiums and road signs. If you have the time, it is really worth your while to look up this company, review its stock chart, and look at its headlines over the years. If there ever was a poster company for a successful, well managed enterprise, it is Daktronics. I discovered this company several years ago, and it has been a huge wealth creator for stockholders.
Because it is still earnings season, I have to mention another favorite, one that’s been written about extensively in this column. Another poster company for a great investment is VCA Antech Inc. (NASDAQ/WOOF). With much anticipation, the company’s fourth quarter numbers were great and the stock just broke through to a new 52-week high. What a great company!
I’ve always loved the pet care industry for investment. If I was smart enough, I would have liked to be a veterinarian. Currently, we have two dogs and one cat in our family. All were rescues, and they provide my wife and me with enormous happiness. If you own pets or have a farm with large animals, you know how costly just basic veterinary care can be.
VCA Antech is one of the country’s top veterinary hospital consolidators. It operates under the brand, “Veterinary Centers of America.”
In its latest fourth quarter, the company’s revenues grew to a record $242.4 million, up from $217 million in the same quarter last year. Net income was $19.3 million, up from $17 million.
For the full fiscal year, the company generated revenues of $983.3 million, up solidly from revenues of $839.7 million in the year-ago period. Net income was $105.5 million, up from $67.8 million in fiscal 2005.
For this fiscal year, the company raised its guidance from earlier estimates. It now expects revenues to be between $1.07 billion and $1.09 billion, with net income coming in between $111 million and $114 million, or $1.29 to $1.33 per share.
Now, this kind of growth isn’t earth-shattering. This isn’t a China stock. VCA Antech’s story is all about consistency, and investors have been willing to pay for this attribute.
This stock is now pricey, but I still think it makes for a great long- term holding. I wouldn’t be surprised if the company saw another stock split soon. It really is a great feeling finding great companies in the stock market.