Today’s new Top Pick for 2014 is a company that serves the global agriculture industry, providing innovative hardware and software applications.
AgJunction (AJX.TO)
from Contra the Heard Investment Letter
AgJunction has undergone a rapid renaissance under Rick Heiniger, who became President/CEO just over a year ago. He was well informed about the company’s operations prior to signing on for the leadership role, as he was already a member of the Board of Directors and had sold his corporation to AJX a few years prior.
Under Heiniger, headquarters were moved from Calgary, Canada to Kansas. Staff was reduced by about 100 people to 170. One division was sold for approximately $20 million so that the enterprise could focus completely on agriculture. Its products in the GPS sector compete at the top of the industry with companies like John Deere, with whom it also has a working relationship.
The company was marginally profitable during the third quarter, typically the corporation’s weakest. Margins increased slightly to 46 percent. Revenues for the year should click in at about CAD $60 million. There is about $12 million in the till and the balance sheet sparkles with zero debt. That means bankers will not come calling. Given that the turnaround is now complete, additional write-offs are not expected, and it should be full speed ahead. The Initial Sell Target is $3.49, about triple the current trading price.
Benj Gallander, Contra the Heard Investment Letter, www.contratheheard.com, 416-410-4431, December 24, 2013