Because of the lack of split announcements, our ability to ferret out the future winners from the rest of the market has been greatly diminished. Therefore, I have elected to look to past winners for inspiration, explains Neil Macneale, editor of 2-for-1.
First, I’m going to keep Copart Inc. (CPRT) in the Index for the time being even though its stock split advantage has worn off after over three years in the portfolio.
Copart operates a comprehensive world-wide online vehicle auction and re-marketing service, primarily selling vehicles for insurance companies, banks, and auto dealers. Buyers are primarily dismantlers, used vehicle dealers, and exporters.
CPRT is currently the most successful stock in the 2-for-1 Index with a 40% annualized return. It is down from its recent high but there is every reason to believe it will recover.
Even if the overall economy flounders for a while, the need for a business that is good at dealing with used cars will not be going away.
Second, I’m going to bring back a stock that was a winner for 2 for 1 about five years ago, with a 24.6% overall annualized return when we sold it in 2016. American States Water (AWR) is a regulated utility providing water to portions of California.
It is also under long term contract to supply water and maintain the water infrastructure for ten military bases across the country. This is another business that is not going to go away no matter what the state of the economy.
AWR is relatively profitable for a utility while having the advantages of a secure and predictable cash flow and return on investment. The dividend is a modest 1.6% but it is secure and growing at about a 6% annual rate.
