Dealmaker’s Diary: A $3B Unsung Hero of the Corporate World

Alpesh Patel|June 27, 2024

There’s an unsung hero of the corporate world… a “boring” $3 billion company that flies under the radar.

From bustling airports to Fortune 500 offices, this silent partner keeps the wheels of industry turning.

But it’s time for the company to step into the spotlight.

With a strong rating on my proprietary GVI system… low volatility… and a whopping 30% undervaluation, the stock is ticking all the right boxes.

And momentum has shifted… just in time for a July breakout.

Get all the details on the company – including the ticker – in my latest video.

Click on the image below to check it out.

TRANSCRIPT

Hi, friends. Dealmaker’s Diary and Stock of the Week. I wanted to do a grand reveal, then I realized I’ve actually written the name down anyway.

It’s ABM Industries (ABM).

What do they do? It’s a bit tricky, actually, understanding what they do unless you are already familiar with them… because “integrated facility, infrastructure, mobility solutions” doesn’t exactly tell you straight away what they do.

They are global, though. And they work in five sectors: business and industry, manufacturing, distribution, education, aviation, and technical solutions. That means they’re diversified internationally and sectorally.

More importantly for me is it’s a $3 billion company, so we’re not talking small. They pay a modest dividend. Revenues have been increasing as well… and those revenues are forecast to grow.

So let’s look at some of those numbers.

On my proprietary algorithm of Growth-Value-Income, we’ve got an 8. Now, remember, this weighs the growth of a company with its valuation, i.e. its share price compared to profitability per share, and its dividend yields. Anything above a 7 meets my minimum criteria, and this one does.

As far as the forecast P/E ratio, you’re paying $15 for every expected dollar in profit. Not cheap, but not expensive.

I want cash return on capital invested to be higher, in the top quartile. CROCI is that number from Goldman Sachs Wealth Management that they use to pick stocks for their wealthiest clients. ABM’s is 5.1. That’s a bit low, but not bad by any means.

Sortino, the average return versus the downside risk of missing it, is 0.24. That’s the bare minimum I can live with, but I can live with it.

Very low volatility. I like that. Whenever I can get low volatility, I like that indeed.

We’ve got nice momentum building since about February and March of this year. The monthly MACD, the blue dotted line, is slowly moving higher. That’s good. And when it’s in conjunction and in tandem with the weekly solid blue line MACD, that usually suggests the rises would be strong and continued.

There’s no definite guarantee of that, of course.

Now, it’s got a bit of resistance at its highs of around the $52 mark. It reached those highs in 2022, and it reached those in 2021. And on both previous occasions, it dropped back down again, so it’s been trading in a range. Could this be the time where it breaks up through it?

Well, what will help is July has been up 63% of time, seasonally, over the last 24 years. And the month has been one of the best performing for the stock as well. So maybe that’ll help break it through the glass ceiling of $52, $53 and see it move upward for a change.

The stock is also helped by the fact that on a discount cash flow basis, it is some 30% undervalued. That again gives some context to more upside moves.

I hope you enjoyed that. Hope it was informative and tiny bit entertaining, even.

Thank you all very much.