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Asset Manager’s Stock Hits Home Run
02/23/2007 12:00 am EST
In his workshop at the World Money Show, Mark Skousen calls US Global Investors a good play on stocks and commodities at a very good price...
From "The Top Ten Home Run Stocks at Home and Abroad" at the World Money Show Orlando 2007:
I'm basically a bull on both stocks and commodities, and so I think I have some excellent ways to play this market.
The first one is one of the unsung heroes of the recent bull market in commodities-- not just commodities, but also foreign investing. And this is a stock [on which] we've already doubled our money, and I'm going to add it back in to my recommended list, because it has fallen almost to half [its] value.
This is a great story called U.S. Global Investors, a [mutual] fund family based in San Antonio, Texas. Frank Holmes is the [chief investment officer] and CEO. He has been speaking here at this conference for quite some time. He is on CNBC a lot and he really knows how to put together a fund family. And the symbol is a great symbol--GROW --it is a stock that has taken off in the last couple of years, going from $10 a share to as high as $71 a share. So, that's a home run stock.
But fortunately for us, the momentum players drove it up too far and have since dumped the stock and now it is trading at [Editors note: Around $40, before a two-for-one split that went into effect last week]. So it has come so far down that now it looks very attractive again. It has 23% profit margins--the highest profit margin of any fund family in the world, as far as I'm aware.
Revenues are up 81% and earnings rose 126% in the last quarter compared to the previous quarter. Another thing that they are doing is they are splitting their stock two for one and they are declaring their first dividend. So, you know, I like dividend- paying stocks, so this is the beginning of a new thing.
Now they have some of the top performing mutual funds, according to Morningstar, with four- and five-star ratings. And what I like about them is it is not just a commodity play, because yes, they have U.S. Global Resources, which is one of our recommended funds in the newsletter. But they also have the Eastern European Fund, which is one of the fastest growing funds in the world. So I like their diversification [and] I think they have a lot of potential to grow even further.
They have a proxy out to do the two-for-one split and to issue some more shares. And when they issue more shares, then you have a little bit of dilution, so I'm holding my recommendation until they actually get the proxy vote and issue more shares. [We'll see] how the market responds to that and then it will be time to jump in.
The key risk-on and off drivers today are the same – U.S. politics, global growth, other centr...