Clean Up with Uniform Gains
02/07/2003 12:00 am EST
"2003 might just be a big turnaround year for the market," says Nancy Zambell, editor of UnTapped Opportunities . "I am finding scores of companies whose shares are dragging bottom, but whose fortunes are not. Not hot companies with unexplainable technologies, but dull, boring--but profitable--companies." Here's her latest buy.
"From its humble beginnings as a commercial laundry in 1936, UniFirst (UNF NYSE) is now one of the fastest growing businesses in the $10 billion garment rental industry. It serves more than 150,000 customer locations. Accounting for the bulk of its business is UniFirst's rental programs: cleaning, maintenance, and replacement of uniforms--all for a weekly fee that is affordable and considerably less than what most companies would spend if they did it themselves. Customers include Staples, Midas, and Wal-Mart. The firm also provides facility services; UniFirst saves its customers like Burger King considerable time and money by monitoring and maintaining such items as soap, hand towels, floor care products, and restroom supplies.
"The company's UniTech subsidiary is the leading company in the world for cleaning and decontaminating garments worn by workers who maintain and refuel nuclear power and nuclear processing equipment. Meanwhile, the company has developed a subsidiary to provide services to 'clean rooms' used by the high tech industry, such as those who process silicon chips and electronic circuits. This business is already booming, and will get even better as the economy improves.
"The company reported a record year in 2002. Sales rose 4% to $578 million, while net income was up 156% to $26.9 million. Right now, the shares are significantly undervalued. The stock is down considerably from its 52-week high. The company is showing rising market share in a fragmented industry. It has solid financial strength and long-term management has a successful track record. There is low, but growing institutional ownership of these shares and just a couple of analysts are currently covering the stock. Buy up to $22 and keep a sell limit of $15 in mind as a stop loss. Don't miss this opportunity to 'clean up' on a bargain basement stock."