by Mark Skousen, Forecasts & Strategies
Our favorite speculation is Houston-based business development company Main Street Capital Corp.
insiders keep buying the shares. Nine members of Main Street's
management team and directors bought additional shares in April and May,
including CEO Vincent Foster and President Todd Reppert. Both are the
largest shareholders in the company.
The firm makes equity investments and lends money to small- and
mid-sized companies. Typically, these businesses are cash flow positive
with revenue between $10 million and $100 million.
Main Street is well diversified. Of the 74 companies in its portfolio,
the largest sectors are commercial services and suppliers, which
comprise 12% of its holdings. Energy and media each make up 9% of Main
Geographically, 43% of its companies are
located in Texas, Oklahoma, Arkansas, Louisiana, New Mexico and Arizona.
Another 29% of the companies are in the West, including California.
investment income rose an outstanding 54% to $20.6 million from the
previous year, and net asset value (NAV) rose from $15.19 to $15.72 in
the first quarter. Operating margins are a whopping 80%. And management
is earning a healthy 18% return on equity.
Main Street also
announced that it was raising its monthly dividend to 14.5 cents per
share, starting in July. The business development company offers a
rising dividend policy after recovering from the 2008 financial crisis.
all of its solid fundamentals, the stock price continues to be
volatile, so investors should take advantage of sell-offs to buy more
Motley Fool recently identified Main Street as a top
stock because it fit all of the following seven criteria: double-digit
rising sales, rising free cash flow and book value, improving margins,
rising return on equity, insider buying, regular dividends, and no
history of being a "hot" stock or media darling.