September 15, 2022

Carr's Group for Agriculture Defense Dividends

Carr's Group for Agriculture Defense Dividends

Obermatt CEO Dr. Hermann J. Stern found on the personal Top 10 list (Premium) the car manufacturer BMW and Brenntag. On the September 15, 2022 Robotics Top 10, he discovered Carr's Group and Vesuvius, all companies with good Obermatt ranks. While BMW is probably familiar to most, Brenntag, Carr and Vesuvius are not familiar to everyone. Since they have good ranks, it is worth taking a closer look.

With Brenntag, I found a research report that they are more focused on higher margins, to me a strategy that makes little sense. Companies like Aldi and Walmart have shown that a lot of money can be made with low margins. It's not the profit margin that counts, but profit growth. At Brenntag, it sounds more reasonable: focus on organic growth. That certainly makes more sense in times like these. At Vesuvius, the CFO and COO have just resigned. That's not encouraging. That leaves Carr. Carr's Group is involved in the agriculture and engineering markets. While agriculture tends to provide stability, the engineering segment operates in the nuclear, oil and gas, defense and petrochemical industries, areas with a future. Based in England, Carr sells worldwide.

PRO: The following three points speak for a buy:

  1. The company is very cheap, so it is a good value, both in terms of sales (Rank 94), profit (better than 76% of alternatives, Rank 76) and invested capital (74). The dividend is also very high, with a Rank of 84, higher than 84% of similar investments.
  2. It is nice that the company has now returned to growth after difficult years (37, 8, 46 in previous years) and is growing above average, better than 65% overall and better than 84% in stock returns.
  3. Last but not least, Carr is in agriculture, which is not uninteresting in Europe with climate change and increased self-sufficiency.

CONTRA: The following three points argue against it:

  1. There are also changes at this company. The Chairman has just taken over the CEO position temporarily and the CFO also has to be found. But the searches were started some time ago. So it is not a surprise.
  2. The shareholder base includes larger shareholders, but what is interesting is that the defense company BAE Systems is invested. That speaks for orders in this area.
  3. Apparently, the agricultural sector is not particularly interesting, because part of it has just been sold.

PRO and CONTRA points roughly balance each other out. Above all, the CEO change is a question mark. However, if you want to invest in agriculture and defense and want a good dividend with no tax withholding, Carr is a good fit. However, we do not buy it for the Obermatt Wikifolio, because the stock is outside the coverage of this offering. However, it is present in SwissQuote.

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