Stocks For Dad
TMF Cheeze's Stock For
Dad
WD-40 Company <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WDFC)") else Response.Write("(Nasdaq: WDFC)") end if %>
1061 Cudahy Place
San Diego CA 92110
(619)
275-1400
Company
Snapshot
Yo, Dad!
What is the deal with you and that little blue-and-yellow can?
A lock gets jammed, you spray it with WD-40. Something's rusted shut, you
douse it with WD-40. Any time something is not quite as slippery as you'd
like it to be, out comes that WD-40. What is this stuff anyway, liquid banana
peel?
Since my recollection is that you spent most of my formative years in the
garage, applying WD-40 to various things, I suspect you'd be interested in
knowing that you're not alone. Fully four out of five American homes have
cans of the stuff stashed somewhere, probably on that little shelf next to
the light switch in the basement. Talk about having a death-grip on mindshare
-- I'm hard-pressed to guess what the number two all-purpose household lubricant
might be. This nifty product has been greasing the wheels of the WD-40
CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WDFC)") else Response.Write("(Nasdaq: WDFC)") end if %> for decades.
Here are some of the things that make this company so attractive:
-- A strong cash position with negligible long-term debt.
-- Fat 15% profit margins.
-- A generous 4.5% dividend yield.
-- A strong brand name that dominates its category.
-- Years of steady earnings growth (interrupted in 1994 by the one-time cash
settlement of a labor dispute).
In addition to its namesake WD-40 product, WD-40 Co. has expanded its product
line in the past year. 3-in-1 Oil is an inexpensive lubricant targeted for
sale in Third World nations; T.A.L. 5 is a sort of industrial-strength version
of WD-40 for heavy-duty applications.
HERE'S WHAT WE'RE HOPING FOR: Strong, steady growth over the long
haul.
WD-40 Co. is not the sort of stock you invest in for a quick 50% return.
On the contrary, this is the type of company you buy now and keep for years,
enjoying the large dividends (a good way to supplement the retirement income
you'll be needing soon, right, Dad?) and watching the company build its strong
brands, and exploiting the growing global markets that are hungry for reliable
consumer products such as this one. In that sense, it's reminiscent of another
strongly-branded liquid-in-a-can with eyes on the global market... Coca-Cola.
HERE'S WHAT TO LOOK OUT FOR: In recent weeks, WD-40 Co.'s shares have
taken an uncharacteristically sharp move upward, which might prompt the cautious
investor to wonder whether this stock may have gotten ahead of itself. Also,
the costs associated with introducing their new products might pressure their
profit margins.
Over the long haul, I suspect these current concerns shouldn't matter. With
WD-40, we have a company that is as reliable as the product it sells.
Happy Father's Day,
Li'l Cheeze :-)
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