Between the NYSE and Nasdaq, there are approximately 4,500 domestic stocks and another 1,500 international stocks trading 250 days each year.
Most of them aren’t worth your time.
Well, that is if you’re a long-term investor, interested in buying quality businesses at a good price and then holding them patiently.
Every publicly-traded has a market value and a fair value (the present value of its future cash flows discounted back at an appropriate rate), but most businesses aren’t sustainably creating shareholder value by generating returns on invested capital above their cost of capital.
Of the companies regularly generating returns on invested capital in excess of their cost of capital, much of the market’s attention is on a handful of them, primarily in the technology and consumer technology sectors.
And hey, those are exciting industries. You can’t blame investors for following those companies.
But as investors, we should be indifferent to excitement or entertainment with the companies we research. Yes, they should be interesting to us (otherwise, we won’t pay enough attention), but sober-minded investing should err on the side of boring than excitement.
During my 20-plus year career in the investing industry, I’ve watched a number of great - but overlooked - businesses based far away from Wall Street or Silicon Valley go on to generate some of the best returns in the market.
Companies like Jack Henry & Associates, Tractor Supply, and Pool Corp. are three that spring to mind.
Here at Flyover Stocks, we’ll be looking for more overlooked or misunderstood quality companies with economic moats led by thoughtful stewards of shareholder capital.
Premium members receive complete stock reports that include analysis on moats, management, risks and opportunities, and valuation.
When I was with Morningstar, I wrote a popular series on Morningstar.com from 2013 to 2015 called “Seeking Small Cap Moats,” where I similarly looked for smaller companies flying under the radar. Of the 16 companies profiled, six have been acquired, and as of August 15, 2023, three of them generated over 400% returns* since the publication date of their profile.
These weren’t deep dives with valuation workups like I plan to do here at Flyover Stocks. The group’s overall performance, however, indicates that there’s opportunity to be found among this set.
We’ll also cover a variety of topics like portfolio management, investing philosophy, strategy, ways to analyze companies at a unit economics level, behavioral finance and much more.
Having written publicly about investing since 2006, one of the things I’ve come to appreciate is the importance of having a community around the content. I don’t view Flyover Stocks is a place for me to sermonize, but rather facilitate conversations around investment ideas so that we can learn together.
Whether this is the start of your investing journey or you are an industry veteran, you are welcome here. Free subscribers to Flyover Stocks will get previews of all company write-ups, but only paid members receive full write-ups (example below), which include analysis of the economic moat, management, risks and opportunities and valuation.
It’s great to have you on board.
Stay patient, stay focused.
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At the time of publication, Todd and/or his family own(ed) shares of Tractor Supply.
Badger Meter (BMI) - published on January 22, 2014. Total return through August 15, 2023 = 597%
Exponent (EXPO) - published on April 23, 2014. Total return through August 15, 2023 = 439%
Winmark (WINA) - published on August 20, 2014. Total return through August 15, 2023 = 502%.
Used dividend adjusted closing price on day of recommendation as starting price.