Looking to feed your growth-starved portfolio? Maybe boost a nest egg stuck in neutral? This stock may be the answer…
Today’s pick comes from an unexpected source: a company producing specialty paints, protective coatings, roofing systems, sealants and adhesives.
Exciting stuff? Not really. But boy, it sure pays the bills (and then some)…
In 2013, this company raked up $4.07 billion in net sales. In 2014, that soared 7.3% to $4.38 billion. In 2015, it jumped another 5% to $4.6 billion.
And just this past quarter, net sales hit $1.16 billion, up $1.07 billion from the same period a year ago. That’s an amazing 7.9% growth rate, a whopping 171% faster than U.S. GDP.
This company is a non-stop growth juggernaut.
In fact, it’s delivered sales increases in an incredible 66 out of 68 years — the only blips coming in the aftermath of the 2008 great recession.
It gets better…
The stock currently pays a dividend. At today’s share price, it’s about 2.6%. Sure, this won’t make you rich, but is nothing to scoff at.
There’s also a strong history of dividend increases. The 5-year dividend growth rate is a solid 4.5%.
The way I see it, any company that’s able to achieve such a strong track record of sales growth, while paying cash back to investors, is a winner.
So what is this company? It’s RPM International (RPM:NYSE).
And while you may not recognize its name, the company’s portfolio of brands will surely ring a bell. They include notable products such as Rust-Oleum, ValvTect, DAP, and Zinsser.
RPM’s key to success is diversification. Its revenue mix comes in at about 65% industrial and 35% consumer. And like an investment portfolio, if one portion of RPM’s end market slows, another should pick up the slack — i.e. if industrial sales are lagging, the do-it-yourself consumer section should help boost growth.
Of course, it helps that RPM’s diverse blend of top brand names typically hold the number one and two spot in their respective product segment (think Rust-Oleum).
Brand recognition is one of the strongest drivers of sales in any market.
Digging a little deeper into the financials, cash flow has grown at an annual rate of 5.6% over the last five years — again, over twice the growth rate of U.S. GDP.
Earnings per share (EPS) growth clocks in at 4.5% per year over the same time period.
And the latest 2016 EPS estimates are $2.49, a leap of nearly 40% from the previous year.
The bottom line
For most of 2016, winning stocks have been hard to come by. The Dow and the S&P 500 are both down on the year. They’re also well off highs set last May.
In a market like this, the smart money is concentrating on stocks that deliver strong, stable growth — especially in the face of a sluggish global economy.
RPM International does just that. With its latest growth numbers coming in at 7.9%, and only two down years in its sixty-eight history, the company defines “a track record of success”.
So if you’re looking to inject a little juice into your growth-starved portfolio, RPM could be the answer.