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The Best Publicly Traded Company A Powerball Ticket Can Buy

 November 28, 2012 04:57 PM

(By Rich Bieglmeier) Powerball frenzy is hitting a fever pitch. Wednesday night's drawing of more than $500 million could be the second biggest winning lottery ticket in history. If you see no stories from me tomorrow, it was nice knowing 'ya.  Snap, back to reality, governments in California and Illinois are crossing finger toes and practicing every superstition known to mankind and in the animal kingdom so that their state quick picks the winning ticket.

We had some fun with this last time by answering the "what would you do with all of that money" question with an investment tilt when Mega Millions had a jackpot of $656 million. Let's do it again.

The cash payout is estimated to be in the neighborhood of $327 million. When the federal taxman is done with you, you'll have about $212.5 million left. Lop off another $10 million for State income taxes, and we are looking at a cool 202.5 million life-changing dollars.

After buying this sweet Florida Keys Island, and a few other toys, we have $190 million remaining to buy a company so that our gold coins can continue to make more gold coins.

The trusty stock screener says there are 3.942 companies with a market-cap of $190 million or less. That's way too many. OK then, we are in business to make money, let's see how many are profitable? Only 1,000 left that were profitable in the last 12 months.

It's important for our potential takeover target to have products that customers want. So, let's see how many grew earnings and sales by at least 10% in the past year: 39 make our list. Now, we are getting somewhere.

Since we plan on living on our Florida island and having the back office direct deposit our fat profits, hiring an efficient management team is key. Warren Buffet says high taxes and a return-on-equity (ROE) of 14 or higher are good. The Investor's Business Daily found that the biggest winners in history had a minimum ROE of 17. ROE must be important, and we are big game hunters baby, and the survey says 12 companies from our list have a ROE of at least 17. Warren, we already paid our taxes.

iStock never thought spending $190 million would be so much work. We are flush with cash and a clean balance sheet, we don't want nobody's stinking debt. Of the dozen, six have a debt-to-equity ratio of zero. Two are in China, toss them in the round file.

Wait a minute, just wait a minute… all those stories of past lottery winners ending up bankrupt flashed across the brain, there ain't no way that's us. We aren't going to overspend just because we are 1 percenter, no way; we worked too damn hard to get here. The most we'll pay is one times sales. Geez, all four are still on the list.

What's next? Thinking, thinking… what's hot, oh yeah, green energy! Are any of the quartet alternative energy? Bingo!

Renewable Energy Group, Inc. (REGI) of Ames, Iowa produces and markets biodiesel primarily in the United States and Canada. Hey, research says that the global market for biodiesel is expected to double in the next 10-years. Plenty of gold coins are a'comin.

With a market cap of $157 million, we still have $33 million left give to family, charity, and a little walking around money. Sounds like a deal to iStock. Before we part, it's been nice knowing ‘ya.



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