Our first idea is a B2B company that is a leader in several industries. Our second recommendation is a sale of an underperforming stock.
Cass Information Systems, Inc. (CASS)
From 2 for 1 Stock Split Newsletter
October saw a small uptick in split activity and I was surprised to land on Cass Information Systems, Inc. (CASS) as the pick for November. The surprise comes from the fact that CASS’s split is only a 6 to 5 stock dividend, a ratio not normally high enough to consider for inclusion in the 2 for 1 portfolio, but there are other factors that make the case.
CASS is the nation’s leading provider of transportation, energy, telecom and waste invoice payment and information services. Because this is a B2B service, most of us (me included) have never heard of this company. Obscurity is a good thing. My instinct is that the market has not recognized some of the unique features of this business.
CASS is a small cap stock ($836M) but it processes over $50 billion in payments annually. Cass Commercial Bank, founded in 1906, is a fully owned subsidiary, providing sophisticated financial exchange services to the parent organization and its clients. Funded by the low cost float of these payments, CASS has no long-term debt and is well positioned to benefit from rising interest rates.
CASS pays a regularly increasing dividend. Volatility more or less tracks the overall market. We may be getting a little over-weighted in the financial sector but, as bank robber Willie Sutton famously said, “That’s where the money is.”
Neil Macneale, 2 for 1 Stock Split Newsletter, www.2-for-1.com, 408-210-6881, November 2018