What the Pros Are Buying

 | Nov 18, 2013 | 2:30 PM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


This column will be part of a multi-part series that looks at some specific stocks that fund managers are moving into. Given the elevated level of the market, it's becoming harder and harder to find attractive ideas.

Last week, 13F filings came out -- the quarterly reports from the Securities and Exchange Commission that show the positions of investment funds -- and there have been some exciting developments. These columns will examine the more intriguing ones.  

It may come as a surprise given this bull market, but some quality businesses have been left behind. One such name is Diebold Incorporate (DBD). Diebold offers equipment and related services to the financial and government markets. The company is known for its automatic teller machines (ATM's) and other cash security products such as check cashing machines, and cash recyclers.

Diebold has a market cap of $2 billion. Shares trade for $30.58 and are flat so far this year. The stock yields a very comfortable 3.8%.  Earlier, the company issued a profit outlook that suggested 2014 revenues would be up in the low single digits, but profits would miss expectations. Diebold expects 2014 earnings per share of $1.65 to $1.85 while analysts were expecting $1.86. Free cash flow, according to the company, is expected to come in between $80 million and $100 million.

With a market cap of $1.9 billion and an enterprise value of $2.1 billion, Diebold has a healthy balance sheet. The 2014 outlook compares with losses that the company will incur in 2013. After the financial crisis, banks curtailed purchases of ATM's. As profits sunk, Diebold replaced its CEO in 2012. ATM sales are expected to continue rebounding in 2014. Diebold also has been aggressively cutting costs and is also focusing more intently on its cyber security and video surveillance businesses. Security and surveillance is currently a $9 billion market in the U.S. and growing.  

Some shrewd investors have taken notice and loading up on the shares. Small-cap investing legend Chuck Royce of Royce & Associates increased his position to 1.5 million shares from 1.1 million during the third quarter. Another small-cap fund, SouthernSun Asset Management, initiated a three million share stake. SouthernSun sees shares approaching $50 in the next three years. Add in the juicy yield, and Diebold shares look intriguing in this market.

Stay tuned for part two of this series that takes a closer look at specific investments made by some of the best names in the business.

Columnist Conversations

today is a good day to lighten the load and take some positions off the table. SOLD WB OCT 85 CALL AT 11 (i...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
View Chart »  View in New Window »



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.