“Knowledge itself is Power,” said Sir Francis Bacon in his 1597 Bacon’s Meditationes Sacrae, and I would venture to say, that phrase is even more important in today’s data-driven world. Imagine if we had perfect knowledge—we would always be in the right place at the right time and always make the correct decisions, like knowing exactly which stocks to buy and when.
But there are two problems with that: 1) We are merely human and no matter how hard we use our superb brainpower, our memory capabilities have long been surpassed by storage on servers, and 2) Information is being created at breakneck speed—light-years faster than we can absorb.
In 2013, IBM said 2.5 exabytes, or 2.5 billion gigabytes (GB), of data was generated every day. And according to DOMO, who likes to keep track of such things, Facebook users generated 2,460,000 pieces of data last year. It’s a quandary all right.
Fortunately, there are companies that have built an expertise in compiling, storing and processing data into usable applications that enhance our life and work. Many years before the Internet, I ran across three businesses that had made data mining an art—even before that term was part of our daily lexicon.
The first was a data gathering company—Find/SVP—that I hired to scan magazines, newspapers and trade journals for press releases and articles about stocks that I followed as a securities analyst. At that time, there was no “online” access to this material, so this information was one of my most important assets.
Next, I went to New York and interviewed New Plan Realty, a company that was the forerunner of the first Real Estate Investment Trust, allowing investors to pool their money to purchase real estate. During my meeting with the company, I discovered that not only did it own and operate a wide range of properties; it also had the “go to” database for real estate demographics which was being used by businesses around the globe.
And lastly, I found out about a company called Franchise Financing of America, at the time, the premier source for “everything you need to know about franchising.” I wrote up both of those stocks in my newsletter, and when investors latched onto them, and the big money flowed in, we made a tidy sum. And later, both companies were bought out by larger businesses.
Now I see a similar opportunity with our Spotlight Stock, CoreLogic (CLGX), presented by Charles Carlson of The Drip Investor. CLGX is a global leader in gathering data, it’s making money and its size is attractive as a potential takeover candidate for a larger company.
Best of all, the company’s largest data efforts are concentrated in real estate, which is making a comeback in the U.S.
* The National Foreclosure Report showed that foreclosure inventory dropped 24.9% percent in April, a decline of 65.8% from the highest point in September 2010.
* As you can see by the graph, home prices continue their steady—although fairly slow—rise across the country.
* Building permits for April came in at 1,143,000, 6.4% ahead of April 2014.
* April housing starts for single-family homes grew 16.7% in the past year, to 733,000.
* Existing-home sales have increased year-over-year for seven consecutive months and are 6.1% higher than a year ago.
Being a leader in a growing industry is an enviable position, and it’s paying off for CoreLogic. The company beat last quarter’s estimates by $0.15 and is expected to see double-digit gains (more than 30%) in this year’s earnings. The shares are not exceptionally cheap; they trade at 33x earnings, but that is about par for the industry—and the shares have taken a brief rest from a nice rise. You might want to consider the “logic” of adding this stock during the rest break.
