Miller Value Partners recently released its Q1 2020 Investor Letter, a copy of which you can download here. You should check out Miller Value Partners top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Miller Value Partners highlighted a few stocks and Pitney Bowes Inc (NYSE:PBI) is one of them. Pitney Bowes is a technology company. Year-to-date, Pitney Bowes Inc (NYSE:PBI) stock lost 32.1% and on June 11th it had a closing price of $2.61. Here is what Miller Value Partners said:
“Finally, I’d like to highlight Pitney Bowes (PBI), a new holding that we have been scaling higher over the past quarter. Pitney Bowes is in its 100th year as a company providing commerce solutions that power billions of global transactions. Pitney Bowes provides e-commerce fulfillment, shipping and returns, cross-border e-commerce, office mailing and shipping, presort services and financial services to their customers. New management has made significant progress over the past two years in improving their balance sheet, reducing debt by >$1B and terming out maturities. Starting in 2012, the company built an extensive global e-commerce platform which was grown to $1B+ in revenue. During 2019, the company opened new distribution centers on the East and West coast. As the facilities reach capacity and redundancy costs in their infrastructure are eliminated, the division has the potential to expand margins over the next couple of years from break-even to 8-12%, nearly doubling the overall company earnings before income and taxes (EBIT). In addition, the company has excess corporate expense which provides significant cost reduction potential. Over the next couple of years, we believe Pitney Bowes has normalized earnings power in excess of $1.50/share and normalized free cash flow >$200M. While the business will have some challenges over the first half of the year due to the economic slowdown, we believe the current market price near $2/share reflects a lot of these near-term fears. Over the next couple of years, Pitney Bowes’s market price has significant upside potential as the current market price is at a normalized free cash flow (FCF) yield greater than 50% and less than 2x normalized earnings.”
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Video: Top 5 Stocks Among Hedge Funds
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