Benj Gallander: Top Picks Update


Benj Gallander Image Benj Gallander President, Contra the Heard

Each January, we ask the nation’s top newsletter advisors for their favorite stocks for 2014. Now that we have reached mid-year, we are following up with some advisors whose performance was most noteworthy. Here, we talk with Benj Gallander, editor of Contra the Heard.

Steven Halpern:  Our guest today is value investor, Benj Gallander, Editor of the Contrarian Focus Newsletter, Contra the Heard. How are you doing today, Benj?

Benj Gallander:  I am doing just fine, Steven. How about yourself?

Steven Halpern:  Very good. At the start of 2014, you chose Flextronics (FLEX) as your favorite stock for the new year. Since then, the shares are up over 40%.  Could you give us some background on the company and your original rationale for recommending the stock?

Benj Gallander:  Absolutely. Flextronics was founded in 1990 in Singapore, so it’s been around for, around, 25 years. They design, manufacture, and supply chain services for OEMs (original equipment manufacturers) and they’re in a number of different fields, from computer to energy, to telecommunications, infrastructure, so my feeling was that the company had already recovered quite a bit in 2010. 

They went from red ink to black ink and have stayed black since then, and I felt that—if the economy recovered—the company would do that much better, which they seem to be doing. 

Often it takes a while for the market to recognize when a company is indeed recovering, and I think—finally—the market has recognized that, and there are a number of reasons for it; revenues are up, earnings are up, the company has a good balance sheet, cash flow from operations last quarter was $1.2 billion with free cash flow $701 million. 

One of the most interesting things is their share count has gone down from about 811 million in 2010 to 623 million at this point in time, so earnings are up but it looks like it’s even more because the earnings per share has gone up further.