Showing posts with label Gentex. Show all posts
Showing posts with label Gentex. Show all posts

Friday, July 15, 2016

Looking in the Rear View Mirror GENTEX symbol GNTX

This market makes even the most experienced investor nervous.  Everything seems expensive.  However, I found a stock I want to add.   In May I wrote about my adding GNTX and selling an immediately call.  See Link on GNTX

I will add more GNTX today.

My original buy was at $16.35.  Today, GNTX is trading around $16.10.  This company pays a nice dividend.  It split in 2015 2:1.  The table below presents the stock buy and call option sale that I executed today.



Good Income Investing.

M*MoneyMadam

Disclosure: Long GNTX with calls.
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Tuesday, May 31, 2016

Why add Gentex GNTX in 2016

A Gentex auto-dimming car mirror.
A Gentex auto-dimming car mirror. (Photo credit: Wikipedia)
Update 6/2/2016  Please note that the ex-dividend date for GNTX is July 5, 2016 not July 20, 2016.  July 20 is the pay day.

Actual execution of this trade was $16.35 basis, selling the September $17.50 strike for a call premium of $.35.



Gentex, symbol GNTX, meets almost all the criteria I need to add it to the 2016 portfolio.  Sadly, I cannot add to the model portfolio because the dividend yield is less than the 2.75% I require, but I am going to add to my personal portfolio and here is why.

Gentex, GNTX, is a solid stock running under the radar of most investors.  In this post I present GNTX’s dividend yield and growth, earnings per share and revenue growth, debt to equity ratio as well as covered call options.

This table presents GNTX’s 2016 criteria:



DIVIDEND STORY

Gentex has paid dividends since 2003.  The stock split 2:1 twice since it started paying dividends; 2005 and 2015.  Adjusted for splits, dividend increases have averaged 10.45% per year between 2010 and 2015.  The most recent declared dividend of $.09 for shareholders as of July 20, 2016 is a yield of 2.17% (closing price on 5/21/2016 $16.57.)

EARNINGS AND REVENUE

As you know, I always require earnings per share to be greater than dividends paid out.  GNTX meets that criteria.  During the last four quarters, EPS were $1.10 and dividends were $.34.  Revenues drive earnings and earnings drive dividends so revenues are important. 

Between 2012 and 2015 revenue growth has averaged 13.47% per year.  In 2012 revenues were $1,099 and in 2015 $1,543.  The revenue growth is solid.

DEBT to EQUITY RATIO

There are many ways to measure a company’s financial strength.  I use D/E (debt to equity ratio.)  I expect no more than a D/E ratio of 1 or equal to industry standards.  Anything more than 1 is troubling.  GNTX sports a D/E ratio of .1194.  This low ratio means GNTX carries very little debt.

COVERED CALL OPTIONS

With the meager yield of 2.17%, I need to boost my current income from this investment.  I think it will continue to grow and we all know how hard it is to find a stock with solid revenue growth in this market.  If GNTX continues to grow, it is highly likely that covered call options will be available.  

A few September $17.50 calls traded today with a premium of about $.35.  The September call is a little further out than I like to go, therefore, I will monitor the situation and when I find the right call, and it may be tomorrow, I will sell a call on half my position.  The table below presents the potential gain from selling this call.





Gentex has a market capitalization of $4.791 billion which is not that large.  Often times companies of this size are dependent on only a few big suppliers.  Lose one contract and you can have trouble.  Be forewarned that a smaller cap stock, even one with the solid history of GNTX can be vulnerable to a customer’s ups and downs. 

Consider Gentex, GNTX, for the income producing portion of your portfolio.

M* MoneyMadam

Disclosure:  Expect to add GNTX and expect to sell calls

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