“Invest in what you know.”
That’s what the smart ones always say, right?
Peter Lynch, pilot of the Fidelity Magellan mutual fund from 1977-90, wrote of paying attention to what stores his daughters bought their clothes and fashion accessories. He reasoned that if his daughters were appealed by a given store’s merchandise, then millions of other teenagers were as well, and that store would likely be a worthy investment. He scored big by getting in early on fickle retailers such as Gap and Claire’s, among many others.
Billionaire Warren Buffett, for his part, stresses investing in businesses that are simple — i.e, easy to understand. He made his ample fortune on products we use every day — Gillette, Coca-Cola, American Express, to name a few.
So I’m all about investing in what you know. But what do I know? Well, after serving as business editor at The Sun in Lowell, Mass., for the better part of 20 years, I know a lot of public companies, large and small, that form about a 30-mile radius from Lowell. And while analysts aplenty follow such entities as Raytheon, EMC and State Street Corp. on a regular basis, few can tell you what a great investment Lowell’s Enterprise Bank has been over the last few years. Its shares closed today at $37. Did you know that you could have bought them for less than $20 just two and a half years ago? Why? Well, the (local) economy is better, and that almost always benefits a bank. And Enterprise has experienced impressive organic growth coupled with prudent expansion by adding, say, one additional branch office per year.
Or how about Chelmsford’s Mercury Computer Corp., which makes clustered computer systems for the military and commercial applications? Shares of Mercury closed today at $33.39. You could have had them for half that only a year and a half ago.
I’ll give you one more: UniFirst Corp., a provider of workplace uniforms and corporate laundry services out of Wilmington, Mass. Its shares closed today at $130.05. Five years ago, they were less than half that? Was it due to the exposure that CEO Ronald Croatti got from his appearance on TV’s “Undercover Boss”? I suppose that didn’t hurt, but a more likely contributor is the fact that the nation’s unemployment rate has plummeted. More people at work means more uniforms to provide — and to wash.
It’s stories like these that I will share here (and hopefully, in most cases, before big upside moves are made) and that’s why we’re calling this space Wall Street Alley. An alley is a side street, a turn-off from a main thoroughfare. The companies we will be looking at here are those that reside in one of countless alleys — in this case, the alley that is the Merrimack Valley. We’ll also dip our toes into Southern New Hampshire and points west, including the Twin Cities of Fitchburg and Leominster, Mass.