Today’s recommendation is from Neil Macneale’s 2 for 1 Stock Split Newsletter. If you’d like to know more about how Macneale uses split announcements to select winning stocks, I recommend reading his recent interview for the Dick Davis Digests Contributor Interview series: click here to read it. Now, here’s his latest recommendation.
“It looked as though June would be another month with just one split to consider. Then, in the nick of time, AZZ, Inc. (AZZ) announced a 2-for-1 split on June 28th. AZZ is a small ($1.67 billion market cap) manufacturer of industrial electrical components and provider of galvanizing services in North America. I had never heard of AZZ prior to the split announcement; in this case, a demonstration of the usefulness of the split strategy to ferret out the great companies that are cruising along under the Wall Street radar.
“AZZ makes many of the components you see when driving past your electrical utility’s neighborhood sub-station. It also operates 34 galvanizing plants in the U.S. and Canada, providing services to electrical utilities, the heavy construction industry and a range of original equipment manufacturers. AZZ has had an average annual growth rate of over 11% in both sales and earnings over the last five years. Assuming infrastructure spending increases nationwide over the coming years, growth should remain steady.
“AZZ pays a 1.5% dividend and its stock price is only slightly more volatile than the market’s. PE and price to book ratios are not cheap but are acceptable given the expected growth. It’s unlikely AZZ will be setting the world on fire, but this type of solid, no-nonsense business is just the type of company that has done very well for the 2 for 1 portfolio over the years.”
- Neil Macneale, 2 for 1 Stock Split Newsletter, July 13, 2012