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Small-Cap Book Publishers The Non-Amazon Way to Invest in the Book Industry
Amazon’s management tells us to chalk these results up to strong sales around the world for books, music and electronics — plain and simple. On the heels of that, we have the climax to the greatest series in publishing history in the form of final chapter of Harry Potter hitting store shelves. That franchise alone has been a huge boon for Scholastic (SCHL: NASDAQ) and Bloomsbury (BMBYF.PK: Other OTC), but leaves them with a huge void to fill. Literacy — whether it’s been sparked by the need to use the Internet, the need to secure better jobs, or simply because more people want to read — is on the rise. Back in the year 2000, there were an estimated 860 million illiterate adults around the world, according to the United Nations Educational, Scientific, and Cultural Organization (UNESCO). It forecast by 2015 literacy will increase around the globe by 7%. So how do you play a secular trend like literacy with small-caps? One way to play it is through an interesting small-cap publisher that’s been around since 1824, Courier Publishing (CRRC: NASDAQ). Courier is technically both a publisher and an actual book manufacturer. It is the fifth-largest book manufacturer in America with a dominant share of the Northeast. **************************** How These Tiny Companies Can Beat the Pants off of Blue Caps If you think Amazon’s 27% jump in one day is impressive, these kinds of profits will blow your mind. This “secret” market’s top-performing stocks have averaged gains of over 25,000% so far in 2007. Only 2,000 people will get a chance to learn about this “secret” market, however. Here’s your chance to be one of these lucky investors and for only 1/2 the cost. But you have to hurry. This offer expires on July 30 at midnight. Only a little over 100 hours remain. Read about it here… **************************** In fact, 82% of its total sales come from book manufacturing. Of those, educational texts, religious titles and specialty trade titles make up the bulk of sales. The publishing business is highly competitive. It’s estimated that there are 43,000 printing companies in existence, and that doesn’t even take into account the myriad of newspaper companies that dot the U.S. Book and magazine manufacturers are an interesting group. One day, they might be churning out 10,000 copies of a top children’s book, and the next day that very same firm might be cranking out a contract for the most lurid, adult publication imaginable. But that’s where Courier has traditionally had an advantage over the competition. Our sources in the industry tell us that Courier has refused to take on adult publication contracts, which gives them a huge boost when negotiating for religious book deals and other morally sensitive clients. Courier’s reputation sets it above the bulk of its competition. And that “above the board” approach to the book business, over the last five years, has brought it returns that outpace the two public companies on either side of the Atlantic that largely control the Harry Potter series.
CRRC stock is trading at 16.5x earnings, 2.5x book, and 1.6x sales. All of these multiples are slightly below CRRC’s 5-year average, and its earnings and book multiples are below industry averages at the moment. And it has a dividend yield of 1.7%. This is an interesting way to play rising literacy around the world without the exposure to publishers desperately seeking the next Potter. Until next time, P.S.: My co-editor, Greg Guenthner, has been studying these lucrative markets that are overlooked by Wall Street and is giving you the chance to jump in on the incredible gains he has produced in his newsletter, Penny Stock Fortunes. You can read about how he does it for free here… |
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Craig has spent the last ten years entrenched in the investment industry and doing what he loves best: performing financial research on scores of companies and writing about compelling investments... <click here for full bio> |
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