5 Best Prefered Stocks To Buy Right Now

5 Best Prefered Stocks To Buy Right Now: ADDvantage Technologies Group Inc.(AEY)

ADDvantage Technologies Group, Inc., through its subsidiaries, distributes and services a range of electronics and hardware products for the cable television industry. The company provides new, surplus-new, and refurbished products in various brands, including Cisco, Motorola and Arris Solutions for use in connection with video, telephone and internet data signals. It offers headend products, including digital and analog satellite receivers, integrated receiver/decoders, demodulators, modulators, antennas and antenna mounts, amplifiers, equalizers, and processors for signal acquisition, processing, and manipulation for further transmission; fiber products comprising optical transmitters, fiber-optic cable, receivers, couplers, splitters, and compatible accessories for transmitting the output of cable system headend to virus locations using fiber-optic cables; and access and transport products, such as transmitters, receivers, line extenders, broadband amplifiers, direction al taps and splitters for use in permiting signals to travel from the headend to their destination in a home, apartment, hotel room, office or other terminal location. The company also provides customer premise equipment consisting of digital converter boxes and modems to receive, record, and transmit video, data, and telephony signals; and hardware equipment, such as test equipment, connector, and cable products. In addition, it offers Fujitsu Frontech North America encoders, decoders, and other media solutions products primarily for use in the broadcast industry. The company markets and sells its products to franchise and private MSOs, telephone companies, system contractors, and other resellers primarily in the United States, Canada, Central America, Mexico, and rest of South America. ADDvantage Technologies Group, Inc.was founded in 1989 and is based i! n Broken Arrow, Oklahoma.

Advisors' Opinion:

• [By Geoff Gannon] el about how those companies use working capital has a lot to do with whether or not you like those stocks long-term.

  Then there are companies that have increased working capital very, very fast over the last decade or so – but they've also increased sales at a startling clip.

  That's Carbo.

  Let's look at where the difference between EBITDA and operating cash flow is coming from.

  Cash flow from others as shown on GuruFocus's 10-year financials page for Carbo – I'll use this as a proxy for working capital changes – was positive in only two years. And not by much. Usually, it's been negative. Over the 10 years, that single line has added up to a negative $173 million. Wow.

  Okay. Then there's the difference between free cash flow and owner earnings. Owner earnings as you'll remember is Warren Buffett's calculation of what a business could pay out to owners in cash at the end of the year – if it stopped growing. But didn't shrink. More on that later. For now, let's look at the difference between Carbo's depreciation and Carbo's spending on property, plant and equipment.

  Over the last 10 years, cap-ex has been: $546 million (or $425 million if you allow cap-ex to provide cash flow in certain years, this is a weird issue I don't want to touch right now)

  And over the last 10 years, depreciation has been: $201.52 million

  That's a big gap. We've got some combination of Carbo underreporting economic depreciation by anywhere from $225 million to $350 million or so – or we've got Carbo investing something like $225 million to $350 million in growth.

  Which is it?

  Let's check the growth angle first.

  Over the last 10 years, Carbo has grown total sales by just under 18% a year. Now, I happen to know their new product development record had not been so hot during the 1990s or earlier part of the 2000s. For about 15! years th! ey spent on R&D without launch ing a single successf

• [By Geoff Gannon] cially the part about what they consider their competitive advantages. You're right that normally a company in their business should see higher revenues, earnings, etc. at the same time. And that time should be when their customers are spending the most on equipment. This heaviest spending will be on new equipment, upgrades, etc.

  But that really isn't ADDvantage's business. Let me explain.

  Do you know anything about a company called Copart (CPRT)?

  Great business. If you haven't read about it, you should look into it. It's a good name to know in the event stocks fall at some point in the future and offer you a chance to buy at a good P/E.

  Anyway, Copart sells cars. That's all it does. It has a tiny bit of the business in the UK that involves buying and selling cars. But normally it's not a principal. It's just an agent. A broker. It doesn't ship cars. It doesn't buy cars. It just stores and sells cars. Copart is a great business. Th is is especially true because they achieve very high returns on their net tangible investment even though they choose to own rather than leases most of their locations. They own acres and acres and acres of land on which they store cars. You can find the addresses for their locations on their website (each car has a location associated with it that will pop up if you click on the car). Copy and paste that location into Google Earth. You'll be amazed at what you see. Anyway, they carry all this land which they then cover in cars and still they earn good returns on their tangible investment in the business without relying on the use of a lot of leases. So, it's a very good and very interesting business.

  Now, if I said Copart sold cars, you'd probably think that their revenues and earnings and free cash flow should rise and fall with U.S. car sales.

  If you look at the past 10 years for Copart and for U.S. auto sales you'll se! e this is! not true. Not even a li ttle bit.

  Why i

source from Top Stocks For 2015:http://www.topstocksblog.com/5-best-prefered-stocks-to-buy-right-now.html