Penn Wealth Publishing

2018.11.04 Penn Wealth Report Vol 6 Issue 04

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04 Nov 2018 PeNN Wealth RepoRt volume 6 issue 04 13 Penn Wealth RePoRt Copyright 2018. All Rights Reserved. investment intelligence undeR the RadaR Four companies being ignored—or missed—by the financial press Espy Manufacturing & Electronics Corp. Electronic Components Espey (ESP $21-$27-$33), a $70 million micro-cap in the Electronic Components industry, does the grunt work for the US military. The company develops, designs, and produces specialized military and industrial electronics, transformers, shipboard systems, metal fabrication, testing equipment, and a host of other mission-critical items. With just 150 employees, the company had revenue of $32 million last year and generates positive net income annually. Espy has a p/e of 21 and a lofty dividend yield of 7.36%. Canon Inc. Business Equipment Cabot Corp. Specialty Chemicals Canadian Imperial Bank of Commerce Commercial Banks Canon (CAJ $28-$28-$41) has been a recognizable name in the electronic business device seg- ment for decades. Founded in 1933 and based out of Tokyo, Japan, the $30 billion company makes and sells a host of products for businesses worldwide, to include: copiers, printers, cam- eras, and medical imaging equipment. The company owns and operates 46 manufacturing plants around the world, with 28 based in Japan. Canon acquired video surveillance company Axis two years ago for $2.8 billion to help diversify their offerings. The company has a very steady revenue stream of around $36 billion per year; in 2017, Canon had a net income of $2.2 billion on revenues of $36.35 billion. CAJ is sitting at a 52-week low of $28 per share. The company's PE is 14. Cabot (CBT $47-$50-$69) is a Boston-based, mid-cap specialty chemicals maker and performance materials company. The $3 billion firm is organized into four segments, but the carbon black, rein- forcement materials segment is by far the largest revenue generator. This unit sells rubber-grade carbon black products for use in everything from tires, hoses, and belts, to molded products and adhesives. The company's activated carbon solutions play an integral role in purifying air quality, both in the home and external environment. Cabot, which notched sales of $2.7 billion last year, is trading near a 52-week low after a brutal October, which knocked 20% off of its market cap. Founded in 1867, Canadian Imperial Bank of Commerce (CM $85-$87-$100) is a $35 billion global bank based out of Toronto, Canada. The firm offers financial products and services to individual, small business, corporate, and institutional clients around the world. With a single-digit PE ratio and a fat 4.8% dividend yield to investors, the bank is selling near a 52-week low. On revenues of $12.4 billion last year, CM earned $3.59 billion in net income—an impressive 29% profit margin. Although not currently in a Penn strategy, we consider CM undervalued, and worth >$100 per share. 3 2 1 4

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