This "Classic Compounder" is under the radar - but not for long

I have made this business a top 5 position

First Look - A classic compounder at a discount

Would you be interested in a business with the following characteristics?

• Service-focused business model that is challenging to dis-intermediate

• Sustainable returns on incremental capital with ample investment opportunity

• Market leadership in core markets with significant barriers to entry

• Strong, embedded customer relationships with low churn and high switching costs

• High frequency transactions of low-cost, high consequence mission-critical items

• Large, fragmented, growing, expandable markets

• A positive network effect with the existing lines of business and channels to market

Before we get started…

Every subscriber who responded to my query requested a “part one” prior to earnings, so this is a “first look” article.

Part two will use updated financial data and management’s outlook to focus on valuation and forward prospects.

Absent (unexpected) information that alters my long-term viewpoint, I would welcome a selloff post-earnings, if one were to occur. If the stock price responds positively, the stock will stay on my list of names to buy on dips.

I mention this because we recently had a few huge, positive moves post-earnings in stocks I have written about - that was unusual. With 100% certainty, we can expect two-way volatility.

Now, let’s get to the stock.