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Unfortunately I've been very unwell recently - enough to disrupt my usual publishing schedule.
Thankfully, I'm feeling much better now.
As both an apology for the quiet period and a thank you for your patience, I'm unlocking one of my earlier paid posts for all subscribers.
I want to particularly thank our paid subscribers - they're the backbone of this newsletter.
They always get first access to these deep-dive analyses and, crucially, full visibility into my portfolio holdings. Their support makes this research possible.
For free subscribers, this is a chance to see the depth and quality of analysis that paid members receive regularly.
Important disclaimer: This post was originally published several months ago and hasn't been updated since. While most of the analysis remains relevant, some details may have shifted.
Recent performance has been poor for CMG, and I have talked about my opinion on their last quarter at length on Schwar’s Radar.
That said, I remain a long-term holder of this position.
The CMG 4.0 strategy continues to unfold, with management's decision to cut dividends to preserve capital for strategic acquisitions already driving 13% growth. These are exactly the kind of transformation indicators I look for in a turnaround story.
If you like what we do and how we think, you can consider becoming a paid subscriber here if you want:
No worries if not, I hope you enjoy the todays free post anyway.
Today's stock:
18.9x P/FCF, 17.3x forward P/FCF
65% recurring revenue
25.9% ROIC
40+ years of category leadership
100% penetration among the largest global players in its industry
Down 44% from all-time highs
Expanding from a niche market to a global powerhouse through strategic M&A
When was the last time you found a company with 40+ years of proven success that's trading 44% below its recent all-time high despite growing revenue by 25.9% CAGR over the last 3 years with a ROIC of 25.9%?
This isn't some speculative tech startup burning through venture capital.
This is a battle-tested business that's survived multiple industry cycles, technological shifts, and economic downturns.
For decades, this company quietly dominated its niche, accumulating cash and paying dividends.
Management was conservative to a fault - so much so that they had no debt and a growing cash pile that wasn't being put to work effectively.
That all changed two years ago.
A new CEO came in with a vision for transformation. And not just any CEO - a tech veteran who had successfully acquired and integrated businesses throughout his career.
Since then, the company has acquired two complementary businesses that expand its addressable market with an additional 200 potential acquisition targets already identified.
And they've maintained their fortress-like balance sheet while doing it.
The results?
A 25% year-over-year revenue increase over the past three years and a clear path to becoming a free cash flow machine.
So why is this company trading 44% below its all-time high when the fundamentals have only strengthened?
It's in an industry that's out of favor right now.
It's not flashy.
It doesn't make headlines.
But when you find a business with this level of compounding potential trading at a reasonable multiple and well off its highs, it deserves your attention.
Let me tell you why this business is at an inflection point that could drive substantial returns and why we've just added it to our portfolio...