Canadian Edge is a newsletter that generally has given a lot of attention to energy and utility stocks and other companies with decent dividend yields, so my first thought when I saw they were teasing an “afterthought stock” was that it must be some misunderstood energy company that’s just beaten down because oil and gas prices are down…
… but it turns out that’s not the case — what’s being teased here is very mysteriously veiled, with Dittman not even willing to mention the industry in which the stock toils for fear of giving yours truly and all the amateur Gumshoes out there too much of a head start, but it turns out that it’s also a company I used to know pretty well. So we can indeed get an answer for you.
But first, to be sporting, let’s go through the clues… here’s how Dittman catches our eye:
“Shocking $11 “Afterthought Stock” Quietly Corners Exploding Market and No One Noticed
“A series of shrewd acquisitions has propelled this tiny company from an also-ran to a Market Titan. It happened so fast—and in an industry so few people
care about—that even Wall Street hasn’t caught on yet.
“But it will—and soon….
“Every day Brian Sanders wakes up, gets dressed and heads out the door for work in downtown Seattle, Washington.
“I doubt that Brian knows that what he does next is part of a market that’s hit a 57-year high.
“Or that he’s using the product of a company that’s quietly becoming an industry titan—right under the nose of Wall Street.
“But I’m sure he’d care if he knew its potential.
“Because what I’m about to show you could easily help Brian—and you—turn $10,000 into $44,893… maybe more.”
Whatever could it be? He compares the potential of this industry to the move that Ford made when it recovered from near-bankruptcy at about $2 to the mid-teens following the “Great Recession” … and then we get some more clues…
“For a market that most people overlook, it sure has become popular. And for one tiny company I’m about to show you, it’s become immensely profitable.
“In fact, in 2013, Americans used this form of transportation over 10.7 billion times.
“The highest number in 57 years.
“And that’s no wonder when you know that an average American household saves more than $10,000 a year when they use the services this market offers.
“Here’s what one industry insider says about what’s happening: “This is a long-term trend. This isn’t just a blip” ….
“From 1995 to 2013, use of this market’s services grew over 37%….
“And these numbers are even more impressive when you know that 45% of our country doesn’t even have access to this form of transportation….
“It’s a $58 billion industry that employs nearly 400,000 people. And more than 7,100 companies are a part of it.”
So what is this secret “industry” that he won’t even mention in the ad? Buses. And I suppose bus transportation is somewhat of an afterthought for investors who are jazzed up by Tesla and airline stocks and other more exciting things, but it is a fairly big business.
And there is a stock that’s been “rolling up” the heavy-duty bus business in the US and Canada — a stock that we featured as an “Idea of the Month” back when it was trading as a strange sort of income security in 2009. This company being teased today by David Dittman is New Flyer Industries (NFI in Toronto, NFYEF)
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I haven’t followed New Flyer since I called it a “sell” in the middle of their reorganization back in late 2011/early 2012, but the basic gist is this: They went public as a strange “enhanced income security” during the very brief window of that structure’s popularity in North America (there were only a dozen or so of them at their peak, I think), so if you bought the “EIS” in the mid-2000s you were buying a stapled security that included both a portion of high-yield debt and a portion of dividend-paying equity. In effect, back when I liked it you were earning a near-15% yield, payed monthly, and had the “backstop” of debt as part of that so you knew there was some downside protection in the event of bankruptcy.
But, of course, paying out a huge yield like that is hard in any business — and this is a heavy manufacturing business that depends on municipalities for most of their orders, so whenever bad news hit or a big order was canceled or delayed (as happened a few times in the recession, when some cities a