• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Warm Business Trends in Minnesota

The upper Midwest is a productive region in several sectors.
By GARY DVORCHAK
Aug 05, 2013 | 10:30 AM EDT
Stocks quotes in this article: SSYS, CPLA, DLX

I like offbeat investor conferences that highlight themes or names I might not otherwise discover, and I report on these regularly. 

I made my way last week to Minneapolis, the capital of the "upper Midwest," for the InvestMNt 2013 conference. This conference was organized by the CFA Society of Minnesota in order to turn a spotlight on names from the region.

Despite the incredibly cold winters, the Upper Midwest is a surprisingly productive region, with leading companies in a range of sectors, from medical devices to agriculture to materials to technology. The conference put on stage several names from the region, whose stories tickled my fancy and will spur additional research.

Here are three at which you should be looking as well.

Stratasys (SSYS), based in the Minneapolis suburb of Eden Prairie, is a leader in 3-D printing, one of the darling tech themes at the moment. The company has been around "forever" (founded in 1989), and spent most of the last 20 years developing the technology and waiting for its markets to develop.

It's unfortunate if you don't already own the stock. It ran from $10 a couple years ago to around $90 now, giving it a $3.5 billion market cap. The run is justified as the 3-D printer market takes off. The company is expected to earn $2.00 this year and $2.50 in 2014, putting the stock at a reasonable 35x price-to-earnings ratio. In the world of manufacturing, the productivity benefits from 3-D printing are impressive.

Furthermore, the technology is steadily diffusing into more applications. I recently toured a high school in which the "shop" class designed things that they then produce on a 3-D printer -- a far cry from the old woodworking I did in middle school shop class!

Capella Education (CPLA), based in Minneapolis, was hit by controversy surrounding its sector of higher education, but may be in the midst of a turn. The stock declined from $90 a year ago to around $30, but started to ramp this spring as investors start to believe the earnings outlook. Analysts are looking for $2.69 this year and $2.89 next year, putting the stock at a "market multiple" of around 17x.

The company is a classic online university that offers a solid education without the capital cost of a large network of classrooms and other bricks and mortar infrastructure. The group certainly was hit by the scandals around federal loans supporting the more aggressive industry players. But given a stagnant employment situation in this country, the need for working adults to train for new careers is clear. Capella is in a good position to capture market share while delivering an important product.

 Deluxe Corporation (DLX), based in St Paul, is an incredibly contrarian name in a Paypal world. Deluxe is well-known for its check-printing operations, which is a business in secular decline as the world moves to electronic payment. If all Deluxe printed was checks, they would eventually go the way of Kodak. Instead, they have reinvented themselves in a number of different segments that leverage their relationships with small businesses.

In addition to checks, they print other forms such as deposit tickets, billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. They also print computer forms and check registers. You can also include accessories and other products, such as envelopes, office supplies, stamps, and labels as well as retail packaging supplies.

More importantly, they have growing businesses in web design and e-commerce for small business and in electronic marketing. This is not a high growth name. Earnings are probably going to progress at about 10% a year.  You are not paying up, however, with the stock at 10x, and the cash flow is attractive. DLX pays a 2.4% dividend, which is rising each year as cash flow grows.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Dvorchak had no positions in the stocks mentioned

TAGS: Investing | U.S. Equity | Stocks

More from Stocks

Fear Fades as a Reason to Rally

James "Rev Shark" DePorre
May 16, 2022 4:20 PM EDT

Monday turns uninspiring as traders lack incentive to buy and oil moves higher amid poor economic data.

Occidental Petroleum Continues to Target Higher Prices

Bruce Kamich
May 16, 2022 2:52 PM EDT

Here's our first price target and our long term objective.

Supply and Demand Are Critical, but Remember: Timing Is Still Everything

Maleeha Bengali
May 16, 2022 1:51 PM EDT

Econ 101 suggests that at some point, either the supply side catches up, or demand falls to get prices back in equilibrium. Let's see what this means for oil -- and a potential recession.

How Is JetBlue's Stock Affected by Its Hostile Bid for Spirit?

Bruce Kamich
May 16, 2022 1:08 PM EDT

Let's review the charts and indicators.

Da or Nyet on McDonald's as It Exits Russia?

Bruce Kamich
May 16, 2022 12:15 PM EDT

Let's check out the charts to see the best course of action for investors.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • 08:51 AM EDT PAUL PRICE

    Advice From the Future...

  • 12:20 PM EDT PAUL PRICE

    A Blast From the Past Regarding Bitcoin

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

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

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.

FactSet 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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login