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Is Gencor Industries (GENC) a Smart Long-term Buy?

Alex Smith
·2 min read

Palm Valley Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of 0.79% for the quarter, outperforming its benchmark, the S&P Small Cap 600 Index which returned -32.65% in the same quarter. You should check out Palm Valley Capital’s top 5 stock picks which helped them beat the market by nearly 33 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Palm Valley Capital highlighted a few stocks and Gencor Industries Inc (NASDAQ:GENC) is one of them. Gencor Industries is the leading construction industry equipment manufacturer. Year-to-date, GENC stock gained 1.5% and on May 18th it had a closing price of $12.07. Here is what Palm Valley Capital said:

"Gencor Industries (GENC) is one of two major domestic manufacturers of asphalt plants. Its business is highly dependent on highway maintenance and construction expenditures. Fluctuations in government infrastructure spending have historically caused Gencor’s operating results to be cyclical. To adjust for the booms and busts in Gencor’s business, we use a normalized free cash flow assumption in our valuation model. Gencor’s valuation is boosted by its extraordinarily strong and liquid balance sheet. Highlights include $8.30/share in cash and marketable securities, $10.50/share in net working capital, and 27 acres of land near downtown Orlando."

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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Disclosure: None. This article is originally published at Insider Monkey.