logo
  Join        Login             Stock Quote

Dorel: Worth the Wait

 November 15, 2012 11:51 AM


(By Saj Karsan) Dorel is one of the oldest stocks on this site's Stock Ideas page, but its time to join the Value In Action page has finally come. Having fallen to as low as $16/share in 2009, the stock now trades for almost $40/share, offering investors who buy when sentiment is negative and sell when sentiment is positive an extraordinary return.

Dorel can be a volatile stock, which works out well for investors looking to take advantage of price volatility. As a distributor into big box stores where shoppers prize low prices, Dorel's margins are constantly under pressure. At the same time, inventory cycle propagation (whereby over or under orders by customers in one period are reversed in future periods) can cause temporary swings in sales that are much larger than swings in business value.

[Related -Upbeat Forecasts For US Housing Sales In March]

But at the same time, Dorel is diversified, selling a number of lines from furniture to juvenile products (e.g. car seats, strollers) to bicycles. If certain products or product lines are doing poorly, profits don't fall off a cliff like they do at one-hit wonders. This can give investors safety even as market pessimism knocks down share prices.

Management has also done a decent job buying companies on the cheap, including its own shares when market conditions have so warranted. So investors not only owned a well-operated business, but they were also the beneficiaries of good capital allocation, a combination that isn't easy to find in my opinion!

[Related -Happy Birthday, Moore's Law - Pearls of Wisdom for Investors]

I miss owning this company already! Hopefully the stock's volatility continues and we all get another decent entry point.

Disclosure: No position

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageUpbeat Forecasts For US Housing Sales In March

The Fiscal Times advises that the “the housing market is about to perk up.” One of the reasons for the read on...

article imageHappy Birthday, Moore's Law - Pearls of Wisdom for Investors

As Moore’s Law turns 50, we reflect on technology’s incredible history and limitless read on...

article imageIndex Investing Is Not Inherently Socialistic

How does capital get allocated to the public stock read on...

article imageDon't Let Fear of a 'Grexit' Keep You Out of European Stocks

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Index Investing Is Not Inherently Socialistic
More Articles on: Finance



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.