America – A Treasure Chest For Growth Share Investors

Above is a chart of a US-quoted company, Performance Food Group (PFGC). Before today I had never heard of it but I can see that it has a great chart. PFGC IPO’d in 2015 at $19 per share so the price has roughly quadrupled. The shares collapsed in 2020 as lockdown led to a dramatic slump in business.

It is a distribution business with a 30,000-strong army of associates who act as intermediaries between suppliers and its many customers in the food service business. Its magic sauce is a skilfully managed acquisition policy with acquisitions funded by debt on attractive terms to boost earnings per share.

Performance Food Group Grows Earnings With Debt-Funded Acquisitions

It has recently announced a significant deal which was announced with its latest quarterly figures.

Net income increased 10.9pc during the quarter to $166.5m. Adjusted EBITDA increased 18.4pc to $456.2m. Adjusted diluted EPS was reported at $1.45 vs. $1.37 consensus and $1.14 a year ago.

Performance Food (PFGC) also announced that it will acquire Cheney Brothers for $2.1bn in cash. The deal will help expand the company’s geographic reach, as the Cheney Brothers’ distribution footprint in key geographies enhances PFG’s existing distribution platform and overall density. With the transaction, Performance Food Group (PFGC) will add another five state-of-the-art broadline distribution facilities with excess capacity for further growth across four Southeastern states.

Clark Schultz, SA News Editor, 14 August 2024

PFGC may never set the world on fire like many US technology shares but shares like it can play a solid role in a diversified, low-stress, growth share portfolio. Quadrupling in 10 years translates to compound growth of 15pc a year, which many investors will find attractive.

O’Reilly Automotive has featured before in Quentinvest and is a spectacular long-term performer. I imagine one reason why is the appeal of diy car repairs. I have just had two windows smashed on my BMW (some weird psycho) and the cost of repair (Autoglass can’t do it) is almost £1,000. Even replacing the windscreen wipers costs £115 so I can see the appeal of diy. ORLY with its comprehensive stocks, reasonable prices and nationwide coverage has great appeal.

Relentless Growth From DIY Auto Repairs

The latest results did not set the world on fire but the shares broadly pushed higher recognising that there will be better and worse quarters but the overall trend is strongly positive.

Our ability to generate solid EPS growth in a challenging macro environment, especially in light of the comparison to the 15pc growth we delivered in 2023 is a testament to the continued strong execution by Team O’Reilly.

Brad Beckham, CEO, O’Reilly Automotive, Q2 2024, 25 July 2024

Something odd is happening with shares in Microstrategy (MSTR). The company holds 252,220 bitcoin worth $15.6bn. This is less than half of MSTR’s market value yet the shares are tending higher. The last time this happened the shares were subjected to a bear raid by a speculator, who did a so-called pair trade involving selling Microstrategy shares short (selling shares he did not own hoping to buy back more cheaply at a lower price) while hedging his position by investing in actual (virtual) bitcoins.

There is an even better opportunity to do this now but the raider has not yet reappeared. One possible explanation is that Microstrategy plans to use Bitcoin as a treasury asset but also as the basis for a business opportunity.

There is a clue in the way Microstrategy describes itself.

MicroStrategy (Nasdaq: MSTR) considers itself the world’s first Bitcoin development company. We are a publicly-traded operating company committed to the continued development of the bitcoin network through our activities in the financial markets, advocacy and technology innovation. As an operating business, we are able to use cashflows as well as proceeds from equity and debt financings to accumulate bitcoin, which serves as our primary treasury reserve asset. We also develop and provide industry-leading AI-powered enterprise analytics software that promotes our vision of Intelligence Everywhere, and are using our software development capabilities to develop bitcoin applications. We believe that the combination of our operating structure, bitcoin strategy and focus on technology innovation provides a unique opportunity for value creation.

Microstrategy website.

We should learn more about this when the company reports later this month. It has the makings of an exciting strategy if the company can generate income from its massive and highly visible position in Bitcoin. Executive chairman, Michael Saylor, the man behind MSTR’s bold and highly successful strategy is a clever man. It would not be too surprising if he had more exciting initiatives up his sleeve. If he does this would be an important ‘something new’ to push the share price higher.

Microstrategy’s Intriguing Chart

The chart looks interesting with a fairly recent buy signal and the potential for a breakout to a new all-time high from a significant consolidation.

What is also great about Saylor is his approach’s total lack of ambiguity.

“We have a simple strategy and our strategy is we just acquire Bitcoin, and we hold the Bitcoin,” Saylor told Benzinga.

Saylor said he believes Bitcoin is the best asset in the world.

“Everything else in the world is inferior to Bitcoin. So, if you gave me $1m and said what do you want to buy, I don’t want to buy a sports team, I don’t want to buy a building, I don’t want to buy a company … all I want to buy is Bitcoin,” Saylor previously told Benzinga.

Saylor also previously said that if people hate Bitcoin, they can short MicroStrategy and if they love Bitcoin they could buy the stock.

Benzinga, 19 December 2024

Strategy – Hang Tough, Buy ‘Priceless’ Shares Into Weakness

I would not advocate buying shares into a collapse but other than that most ‘priceless’ shares should be suitable for buying and holding in the face of weakness. US growth shares are often resilient and repay faith. Selected Chinese shares may be the same. My latest follow-up recommendation for Futu Holdings (FUTU) and its baby brother, UP Fintech (TIGR) coincided with a spectacular bout of profit-taking. There is no sign that this is related either to valuations which remain modest or to fundamentals which remain excellent.

Share Recommendations (9 October 2024)

Performance Food Group. PFGC

O’Reilly Automotive. ORLY

Microstrategy. MSTR

Futu Holdings. (FUTU)

UP Fintech (TIGR)