Closing Out the Roadrunner Stock Portfolio
MSC Industrial Direct (NYSE: MSM) reported fiscal 2016 revenue fell 1.6% year-over-year to $2.9 billion because the company continues to suffer from low oil prices and a strong U.S. dollar. The current market conditions dampened demand, especially in metal working and heavy manufacturing. MSC expects sales to continue declining in the first quarter of fiscal 2017. Management recently boosted its quarterly dividend 4.7%, but given the uncertainty the company faces and its shares trading near a 52-week high, we recommend selling MSC Industrial Direct and booking a 25% return.
SJW Corp. (NYSE: SJW) announced third-quarter net income of $19 million, or 92 cents per diluted share, compared to $9.5 million, or 46 cents per diluted share in 2015. The company posted revenue of $112.3 million, compared to $83 million in 2015, driven by higher rate increases and growing customer usage. SJW’s regulated business keeps growing and generates strong returns for investors. Buy SJW under $48.
US Ecology (NSDQ: ECOL) announced total revenue in the third quarter fell to $124.8 million, compared to $148.4 million in 2015. The decrease was due to a sluggish industrial environment as well as a $20.1 million contribution from Allstate Power Vac in 2015, assets which the company divested in November 2015. Third-quarter net income increased slightly to $10.1 million, from $9.9 million in 2015, while diluted earnings remained flat at 46 cents per share. Management expects headwinds for the remainder of the year, lowering its earnings range to $1.54 to $1.65 per diluted share, compared to previous guidance of $1.80 to $1.95 per diluted share. Although 2016 leaves nothing to be excited about, 2017 is likely to show improvement as customers wait until the New Year to start new projects. Buy ECOL under $45.
W.R. Berkley (NYSE: WRB) posted strong financials and sound underwriting in the third quarter as net premiums written increased to $1.6 billion, from $1.57 billion in 2015. Net income increased to $221 million or $1.72 per share, from $152.6 million or $1.18 per share last year. Return on equity also improved 19.2%, compared to 13.3% last year. Management will expand its product offerings by creating new divisions to address new markets and risks. Earlier this year, the company formed Berkley Insurance Asia, which caters to the lucrative Asian commercial insurance markets. Buy WRB under $52.
Weis Markets (NYSE: WMK) announced third-quarter sales increased 4.4% year over year to $743 million with comparable store sales for the period increasing 2.7%. Net income for the quarter fell 16.9% to $10.6 million, or 40 cents per share, because of $4.4 million in costs related to the company’s recent acquisitions of Mars Supermarkets and Food Lions stores. For the first nine months of 2016, Weis’s sales increased 3.2% to $2.2 billion while same-store sales grew 2.7%. Weis Markets has become a major player in the supermarket game by expanding both its market share and business. We’re raising our buy target for Weis to $60.