From the March 2020 lows, the S&P 500 Total Return Index powered ahead with an 89.79% gain in just a little over one year. The 2 for 1 Index moved +90.49% over the same period, asserts Neil Macneale, editor of 2 for 1 Stock Split Newsletter.
Can the intrinsic value of our corporations change that much in one year? I don't think so, and one could conclude the markets are seriously detached from reality.
The degree of detachment might be viewed as a measurement of the gap between sober investment vs. sometimes rather bizarre speculation. I'm thinking GameStop (GME) and cryptocurrency.
I like to think the 2 for 1 Index falls more on the sober investment side of the equation. I have always favored profitable companies that make or sell things we actually need.
I like dividends because they indicate a company is conscious of its owners and is working in their interest. Similarly, strong balance sheets are an indication that a company's board members are not themselves simply speculators gambling with OPM (other peoples' money).
The proliferation of SPACs, (special purpose acquisition companies), investment instruments with no product and no earnings, is now dominating the buzz on Wall Street and is the latest manifestation of the urge to gamble.
There have been several split announcements since the last adjustment to the index. When compared with the various splits going back a few months, none of the recent splits quite measure up.
Therefore, I'm going with Hawkins Inc. (HWKN). The company announced a 2 for 1 split back in January and I've been watching it with interest since then.
A recent dip in its price makes it more attractive than it was last month. Hawkins is a company that meets all of the desirable criteria noted in the paragraph above, including an insider ownership around 9.4%.
HWKN is a small cap business based in Minnesota making and selling specialty chemicals used in industrial processes, water treatment, and food preparation.
Reasonable valuation numbers, good growth over the last few years, a very dependable 1.4% dividend, and a low measure of volatility all make HWKN a good fit for the 2 for 1 Index.