Summary
- Tracking management guidance and conference calls can give you hints of what is to come.
- Sanmina’s quarterly performance was improving and management was optimistic about 2014.
- Management’s credible historical guidance convinced me that the market would like 2Q14 results.
- This is a simple yet powerful example of a plain analysis that can be applied to other similar opportunities.
Sanmina (NASDAQ:SANM) is an example where watching management guidance and quarterly results paid off. This article outlines how I got into this investment and how a simple analysis can lead to relatively easy returns.
During March 2014, Sanmina appeared as a potential investment when my value model generated a list of stocks that were trading cheaply. I first went to Value Line and noticed that it was rated 1 for timeliness. Furthermore the investment summary made some good points in favor of the company. These included:
- “The company’s profit performance has been getting a boost from restructuring efforts, an improved sales mix and lower interest expenses…”
- “A stronger balance sheet provides more flexibility… Sanmina has paid down more than $600m in long-term debt since fiscal 2011…”
So we have a company that has been restructuring and this has helped the bottom line. In addition, the company is reducing debt. These two points alone are music to an investor’s ear.
To read the entire article go to: Sanmina: How Watching Guidance Lead To This Profitable Trade
