Tuesday, February 07, 2012

Mine Safety Appliances (MSA)


Mine Safety Appliances (MSA) is a global leader in the development, manufacture and supply of health and safety products for work and the military. 

The company has grown profits and dividends between 10-20% over the last 10 years while earning a 10-20% return on equity.

While MSA stumbled during the recent recession, it should return to its prior levels of growth as a result of:

(1) the recent pick up in economic activity has led to growth in order backlog,

(2) acquisitions. The company recently acquired General Monitors, strengthening its presence in the global oil, gas and petrochemicals markets,

(3) an aggressive cost reduction program,

(4) geographic expansion into Europe and the emerging markets.

A recent review of MSA disclosed that its financial strength has deteriorated sufficiently that it no long qualifies for inclusion in the High Yield Universe. The High Yield Portfolio will use the current Market strength to gradually move out of this holding.

MSA is rated B+ by Value Line, carries a 44% debt to equity ratio and its stock yields 3.1%.

Statistical Summary


Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
MSA 3.1% 3% 47% 10
IND 1.4 8 22 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
MSA 44% 15% 4 6% B+
IND 37 17 NA 8 NA

Chart

Note: MSA stock made good progress off its March 2009 low, surpassing the down trend off its December 2007 high (red line) and the November 2008 trading high (green line). Long term, the stock is in an up trend (straight blue lines). Intermediate term it is also in an up trend (purple lines). The wiggly blue line is on balance volume. The High Yield Portfolio owns a 75% position in MSA. However, as noted above, the company no longer meets the financial criteria of the High Yield Universe. Accordingly, the High Yield Portfolio will take advantage of the current strength in the Market to eliminate this holding.




http://finance.yahoo.com/q?s=MSA

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.