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At last September’s Value Investor Congress, Guy Gottfried picked a stock that rose 57% and increased its dividend 50% in the last year. What will he pick this year?
On Sunday, I’m flying down to New York City to attend the Value Investing Congress. The event – known as “The Super Bowl for Value Investors” – features investment presentations from 18 top hedge fund managers.
I’m expecting to come back with lots of new ideas for further research and due diligence by my investment research team.
But the real reason I’m attending is to hear the latest idea from a small hedge fund manager from Toronto. Here at our office, we call him “The Warren Buffett of Canada.” That’s because of his impressive track record and knack for finding deeply undervalued stocks.
His name is Guy Gottfried. His firm focuses their investments in undervalued, and overlooked Canadian companies. Most people have never heard of him. But Gottfried may be familiar to Income & Prosperity readers, since I’ve written about him several times in the last year.
After attending last year’s Value Investing Congress, I told you about a stock that Gottfried recommended. My article – Canada’s Guy Gottfried is Buying This Small Cap Stock – featured Supremex (Toronto: SXP). For U.S. investors, the stock trades on the OTC BB under the ticker symbol SUMXF.
Supremex is one of the most boring investments in the world (these are often the best stocks to own). The company makes envelopes. Yes, envelopes for mailing letters, account statements, direct mail, and packages. That’s as boring as business gets.
But as Gottfried pointed out, the business is a cash cow. And the stock was dirt-cheap – trading at just three-times the free cash flow of the business. With all that cash flow, Supremex paid a 6.6% dividend yield.
The reason to buy Supremex last year was simple: the cash flow was growing and the stock was priced as though the company was going bankrupt.
Immediately following Gottfried’s presentation, I bought the stock. A few days later, I recommended the stock to Income & Prosperity. Here is what I said back then:
To unlock shareholder value, Gottfried is advocating a big increase in the company’s dividend. He thinks Supremex could easily double its dividend payment, which would translate into a 13% yield.
Supremex is a very tiny company with a market cap of just $54 million. It’s so small that I would normally avoid telling you about this opportunity… Supremex is a higher-risk, higher-reward opportunity.
But if the company does double its dividend, I expect the share price to follow suit. And that’s why I’m building a small position in this stock. If you’re looking for dividends plus growth potential, look no further…
Since then, Surpremex has delivered. Last November, I updated you on The Rare 33% Dividend Grower.
Supremex has increased its dividend twice in the last year. And the company’s dividend is now $0.18 per share, or a 50% increase.
So how has Supremex’s stock performed? It currently trades at $2.90. That’s a 57% increase from the price on September 20, 2013 when I first alerted you to the stock. Just as I expected, the Supremex stock price has risen in lock step with the dividend increase.
I continue to own Supremex in my personal investment account. I’m sitting on a healthy capital gain, and my dividend yield is now 9.8%.
Next Monday at 4:30 p.m., Guy Gottfried will be presenting at the Value Investing Congress. This is an exclusive event that costs $5,995 to attend. He typically recommends at least two stocks at this annual event.
I’ll be sitting in the audience, waiting to hear his latest and greatest value stock recommendations.
Gottfried normally recommends Canadian small caps that are extremely illiquid. Given the low volume, I’m not going to be able to share his latest recommendations with my 100,000 Income & Prosperity readers.
However, a select group of just 150 readers will be getting alerts directly from the Value Investing Congress. If you want to be among the first people to hear about Gottfried’s latest recommendation, just click here right now.
I need to hear from you by Monday at 9:30 a.m. I don’t want to pressure you. But space is limited, so you need to act now if you’re serious about finding deeply undervalued stocks.
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