July Idea of the Month: Summer Two-fer

By Travis Johnson, Stock Gumshoe, July 20, 2012

This month I have two stocks that are really catching my attention: one that I’ve held for many years and think is one of the most solid and steady companies you can buy, at a nice value right now; and one that caught my eye following a teaser writeup I did a couple weeks back, it wasn’t the stock teased but it’s in the same business and I think it’s a better bet as a speculative growth pick.

I think there are some potentially great deals available now in commodity-related stocks, like those that I mentioned last week in the intro to the Friday File, but given the very shaky market for miners and their volatile and uncertain future, I’d prefer to write to you right now about companies who are profitable and have some sort of sector or industry tailwind, and whose destiny is far closer to being under their own control.

[If you want to be more hard-asset aggressive: If gold goes to $2,000 or above, Sandstorm Gold (SSL in Canada, SNDXF pink sheets) is a ridiculous bargain; if steel demand stays even close to steady over the next five years, Altius Minerals (ALS in Canada, ATUSF on the pinks) will do spectacularly well with their Canadian iron ore properties. I own both of those.]

For those who like the short version of this month’s ideas: Markel (MKL) is a good buy now, they’re below 1.2X book value and they’ve been quietly pushing up their venture capital investment to diversify their revenue base even as their combined ratio has bounced back a bit this year in a slightly hardening market.

And since Markel is technically a repeat in this space, the second part of the twofer is that I think Invensense (INVN) should show great growth on Android smart phone motion sensors, and is being overly punished for being reliant on sales to weak Nintendo in the past.

More detail? Sure.

You probably know Markel (MKL) if you’ve been around these parts for a while or if you’re a value investor – they are the insurance conglomerate that’s most actively trying to take the baton from Warren Buffett’s Berkshire Hathaway (BRK-A or BRK-B, which I also own and have called attention to in the past when it has occasionally gotten notably cheap), to the extent that they even typically hold an event at the Berkshire annual meeting (I’ve yet ...

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