Friday November 20, 2009
In his 2-for 1 advisory, Neil Macneale focuses exclusively on buying stocks that have just announced upcoming stock splits. The latest buy in his portfolio is Ebix (NASDAQ: EBIX).
"As the holidays and the year-end approach, I am feeling much more optimistic about the market and the 2 for 1 portfolio.
"Our latest buy is Ebix; the company has announced a 3 for 1 split on 10/12/09, to be delivered on 12/10/09. This is rather remarkable given this company split its shares 3 for 1 just one year ago.
"Ebix develops and sells software for the insurance industry. The company is based in Atlanta, GA but, in fact, is an international business. Fortune magazine ranked Ebix #4 on its August, 2009 list of the 100 fastest growing companies and #2 as the best investment within that group.
"So what’s to like? The company has a relatively high PE ratio, pays no dividend, and has a rather precarious balance sheet. This is not my type of stock and I was not interested when the split was first announced.
"However, there is the growth. Apparently, what Ebix sells has become essential within the insurance industry as companies strive to cut costs and to become more customer friendly. Ebix has had an average growth in earnings of over 66% per year for the last five years.
"And experts see no reason to think there is a slowdown over the horizon as the world’s economies and the insurance industry recover from the recession. Growth like this makes Ebix look very undervalued.
"While I’m a little out of my comfort zone with this recommendation, it seems worth the risk. As split stories go, Ebix has one of the best and, after all, our portfolio is all about stock splits."
