By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month Report
From Cabot Wealth Advisory, 2/12/09 Sign up for free Cabot Wealth Advisory e-newsletter
Today I’ve got a new idea for you, a stock that popped up in Cabot Top Ten Report just last week. It’s Brinks Home Security (CFL) and here’s what Michael Cintolo wrote about it.
“Brinks Home Security installs and monitors home alarm systems, including burglar, carbon monoxide, heat and smoke. The company was spun off from its famous parent on October 31 and there are several reasons to like it. First, like most companies that have recently come public, it’s not well known as a stock yet, so there are far more potential buyers than sellers, and as the story gets out, these buyers are likely to bid the stock up. Second, it has no long-term debt, which is a marvelous thing. In fact, the parent company retained all pension liabilities! And third, it’s in a business that provides excellent recurring revenue, a trait we’ve always been keen on at Cabot. In the third quarter earnings release, for example, the company noted that Monthly Recurring Revenue (MRR) rose 9.6% from the year before to $39.8 million.”
I look at it and I see a company with perfect five-year trends (viewing the company as an independent entity) of growth in both revenues and earnings every year. The valuation seems fair. Finally, there’s the fact that if we’re heading for a difficult period where people are increasingly conscientious about protecting their homes, Brinks will benefit. By the way, the stock’s symbol (CFL) stands for “Customers For Life.”
The stock bottomed with the market back in November and has been in a good uptrend since. The past week has seen it pull back a couple points from its high of 25 and I think buying between here and 22 could work out well.
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President, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.