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- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 2
Coloplast A/S engages in the development and sale of intimate healthcare products and services in Denmark, the United States, the United Kingdom, France, and internationally. The company operates through Chronic Care, Continence Care, Voice and Respiratory Care, Interventional Urology, and Advanced Wound Care segments. It provides ostomy care products, continence care products, catheters, and wound care products. Coloplast A/S was founded in 1954 and is headquartered in Humlebæk, Denmark. The company has a long history and track record, but does not have a lot of analyst coverage (it trades OTC). It is trading at a relatively low valuation vs historical, and reporting a bit of a messy set of numbers due to some changes in its product portfolio (divestiture and acquisitions).
But underneath the messiness, the growth and profitability seems solid. Organic growth across their business lines + sustained profit margins. I think this stock will go higher as the underlying organic growth show through. The only change that is negative is they took on a lot of debt to acquire a new generation of skin care technology while ditching their very old line that is being commoditized. Was it too much? Possibly. But their coverage ratios seem okay, their dividend seems safe (cross my fingers)and as an equity holder, I don't mind levering the balance sheet to juice ROE if its manageable.
Valuation seems high with a PE of 32 or so. But that is about as low as the PE has been in the last 5 years. I haven't mentally gotten clarity on why this feels okay to me. Usually a PE like that would seem too high. But its a solid business, with high single digit long term growth in front of it (7-8%), not exposed to volatility like many businesses, and capable of getting more margin out of the business than it does today. There is a CEO transition happening at the moment and so that creates some uncertainty and potential disruption to strategy. But I am betting once that gets settled, it creates only valuation upside.
I have started to accumulate this stock at <$9/share under the CLPBY ADR.
No. of Recommendations: 1
The window of opportunity to accumulate at $9/share or below was very short lived. I've ended up buying more at around $9.40 post their Q3 earnings, which were very solid. I could have posted about Coloplast (CLPBY) on the Falling Knives board because they are down 30% over the last year. I expect them to make that up and more in the coming year, based on steady and continuing revenue growth in the high single digits, progress on cost reduction, and successful completion of a CEO search. Target price of $15-$20 in a year if all goes well.
No. of Recommendations: 2
Scratch that - $15-$20 in 1 year is a stupid target. I would expect earnings to be up 25-35% and for dividends to increase as typical. With no change in valuation multiples since it already has a historically low but still elevated PE ratio, target in a year might be more like $13-$15. But what I find really appealing about is that I expect it to be good diversification within a portfolio with a good amount of US stock exposure.
No. of Recommendations: 2
Coloplast must feel like the nerd at the school dance. On this board, its got no rizz compared to UK food companies. But for those who might like a more health tech oriented play in the non-US space, CLPBY is down below $9. I think that is a reasonable price. If it goes down from here, it will be because of valuation multiple contraction (entirely possible because they are still pretty high) rather than because of business fundamentals. I think the stock is capable of rerating with a new CEO and what I hope / expect will be a normalized growth year for the business with improving profitability. Their underlying markets are fine and good long term bets. They are a pretty good operator in their businesses with ongoing opportunities to expand their addressable market.
I have already bought a full allocation, but if it did drop to something like <$8.50, I would probably add. One thing is that while its a $20B market cap stock and has analyst coverage, it is definitely not a media stock and trades with little news flow in the US. I suspect trading volume is also very limited. So best to think of this as a stock you would buy to hold for a long time.
No. of Recommendations: 1
If you chose not to take Coloplast to the school dance, you made the right choice. Currently trading at $6.30, this discussion needs to be moved from the non-US stock board to the Falling Knives board. And I definitely will do that because it is no longer trading at the uncomfortable multiples that I mentioned previously. The new CEO has now started and its a credible pick - Gavin Wood from JNJ. They are down on a downward revision of revenue for the year and the write down of goodwill on an acquisition they overpaid for a while back. But I think their forward prospects are quite good and their valuation is no longer demanding.
No. of Recommendations: 1
If you don't want to roll the dice without better information, they report on May 12. So you can wait until whatever fallout comes from that before you decide.
