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First Looks are some of my favorite Insights to write. They’re an opportunity to find niche players I’ve never heard of or get under the hood of a big name making its stock market debut. Oftentimes, this means I have little in the way of expectations. I don’t want my initial opinion to blind me to the reality of the data.
However, I’m not perfect.
Today’s First Look will explore Garmin, a company that I and the other analysts had written off as a relic of road trips past. To me, Garmin makes the GPS that came with your rental car in 2007 or the golf watch your boss wears (Hi JT!). Its branding makes me yawn and elicits the same amount of excitement as a pair of hiking boots or a bag of granola. It’s bland, and this blandness poisoned my thoughts.
Turns out, Garmin is almost the perfect investment. Its highlights include:
- A highly diversified stream of revenue that has grown reliably over the last six years. In FY 2021, it was up 19% YoY reaching $4.98 billion.
- An astounding 24.5% operating margin. A mind-blowing figure when you remember it manufactures hardware and this is slightly below where it was in 2020 due to supply chain issues and increased shipping expenses.
- Vertical integration — need I say more?
- Absolutely zero debt and $3.2 billion of cash on hand. This explains why they’re so fond of stock buybacks.
- And to top it all off, a 2.58% annual dividend, which is expected to rise by 9% in 2022.
How does Garmin pull this off? Let’s break it down…
Anne Marie’s favorite stock is Costco. When the market is turbulent and tech stocks are volatile, Costco is always there to shore up a portfolio. A brick and mortar staple, this wholesaler has continued to grow in defiance of e-commerce, proving that great customer service and free samples are always worth the trip. The company also provides high wages and comprehensive health care to its entire staff, making it a stock you can feel good about owning.