u/Dynaheir-be

A. O. Smith is a global water technology company with two segments. North America (~75% of revenue) sells water heaters, boilers, and water treatment into a replacement-driven duopoly market alongside Rheem and Bradford White. Rest of World (~25%) is mostly China water heaters and water treatment. The North America business is exceptional. When a household water heater fails it gets replaced within days, the plumber distribution channel has high switching costs, the market structure is a stable duopoly with pricing power, and operating margins run 23-24%. This is the kind of boring, recurring, low-cyclicality business that compounds for decades. 31 consecutive years of dividend increases tells you what the underlying business looks like in normal times.

This looks like a quality business at a fair price. Cheap, not exactly.

• Trading near 52-week lows around $58-59, down 28%+ from $81.87 high, market cap ~$8.5B
• D/E 0.17. Investment grade balance sheet, no covenant or refinancing risk
• FCF $546M in 2025 at 100% conversion. Earnings convert fully to cash
• $597M returned to shareholders in 2025 via dividends and buybacks. $200M buyback planned for 2026 at current depressed prices
• Forward P/E ~15x on revised 2026 guide of $3.70-$4.00 adjusted EPS. Below historical average for this quality of business
• 2.4% dividend yield with 31 consecutive years of increases. Dividend aristocrat status reflects the underlying business durability
• Headwind is identifiable and bounded. China weakness (25% of revenue) is the primary drag. North America business remains structurally healthy
• Price increases effective mid-May at 4-7% across North America offset steel cost inflation, with benefit realization in H2 2026
• Replacement demand structurally insulated. Water heaters fail and get replaced regardless of economic cycle. The duopoly maintains pricing
• Analyst consensus target $73 (~24% upside) with downside protected by buyback floor and dividend support & me (😛)

Invalidation signature

• China revenue decline accelerates beyond -15% YoY for two consecutive quarters
• North America replacement demand turns negative (housing collapse spillover)
• Steel cost recovery via price increases fails to materialize in H2 2026 results
• Buyback program paused or dividend growth halted
• Operating margins compress below 20% in North America segment

This is probably a case of a great business at a reasonable price. I'd prefer it to be even more reasonable, so very much worth watching.

Bio-Techne is a life sciences "picks and shovels" supplier. They develop and manufacture reagents, antibodies, proteins, and instruments used by pharma R&D departments, biotech research labs, and academic researchers worldwide. Not a drug company, but a critical supplier to everyone trying to make drugs. The business model is exceptional: 65-70% gross margins, recurring consumables revenue, tens of thousands of diversified customers, validated product moats where switching costs are reproducibility risk rather than price. Once a lab validates an antibody for an experiment, they reorder the same catalog number for years. Published papers cite specific products, creating cumulative switching costs across the scientific literature. This is the same quality category as Thermo Fisher, Danaher, and Sartorius, which is why the market correctly assigns it a premium multiple in normal conditions.

• D/E 0.17. Clean balance sheet, dividend maintained at $0.08 quarterly, active share buyback
• Gross margins 65-70% structurally. One of the highest-quality business models in life sciences
• Recurring consumables revenue. Labs reorder validated reagents for years; switching costs are reproducibility risk, not price
• Massively diversified customer base. Tens of thousands of accounts, no single customer above 1-2% of revenue
• Headwind is identifiable and policy-driven. US academic funding cuts under current administration are pressuring near-term growth, not the business model
• Pharma R&D customer base remains the larger and more resilient segment. Recovery doesn't require academic funding to return, only stabilization
• Cell and gene therapy, bioprocessing for biologics provide structural growth tailwinds independent of academic funding cycles
• Analyst consensus target $71.82 (~28% upside). All major brokers maintained Buy ratings despite target cuts; median target $76

Possible Invalidation signature

• US academic funding cuts deepen further in FY2027 budget
• Pharma R&D customer base shows accelerating weakness, not just academic
• Organic growth turns persistently negative for two or more quarters
• Gross margins compress below 60%
• Dividend cut or buyback paused

This one popped out for me on swing-finder org free site the other day. Genuinely surprised how much value is being given away.

Publishing and news business in the uk priced for very short term bankruptcy for no indication that is coming.

- Trading at 49p, ~2x forward earnings, ~14.5% dividend yield, market cap ~£155M. Priced for short.

- Operating cash flow £103M in FY2025 with 99% cash conversion. Earnings power is real, not accounting

- Net debt £35M against £145M revolver extended to 2029. Survival not in question

- Adjusted EPS grew to 26.8p in FY2025 (up from 25.3p) despite revenue decline, driven by cost discipline and margin expansion

- Pension overhang ending in 2028. £57M annual contributions in 2026 unwinding to near zero, structurally releasing cash flow

- Panmure Liberum forecasts FCF/share moving from negative 2026 to 7.1p in 2027 to 13.1p in 2028 as pension drag rolls off

- £182.6M non-cash impairment in FY2025 has reset book value and removed the goodwill overhang that distorted statutory metrics

- Print resilience surprising to the upside. Q1 2026 print down only 6.6% vs broker assumption of -8.1%

- Subscription rollout accelerating. 11 paid products live (up from 6 in two months), targeting 75,000 subscribers by end 2026

- Analyst consensus price target 126p (~157% upside). Panmure Liberum target 139p (~184% upside)