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The Madness of March and an Elite Group of Eight: Part Deux

Wednesday - 4/10/2013, 3:51pm  ET

A few weeks back, I wrote about The Madness of March and an Elite Group of Eight. Since then we’ve seen a couple of Cinderellas emerge. One whose glass slipper fit surprisingly well (FGCU), until it shattered when dancing with her cousin from up I-75 a piece (Florida). Another whose ticket remains un-punched and now gets to dance at the biggest event it has seen since 1965 (Wichita State). How will it fare against the perennial powerhouse from Louisville? Lots of opinions both ways... but no one really knows.  And that's why they play the game.

In the world of long-term successful investing, it doesn’t come down to making that last second three-point shot. It comes down to effective long-term management of good talent and successful products and services. Last time I spoke of an Elite Group of Eight that had raised their dividends for 50 years or more--an astonishing feat for any team. Last time, we talked about the four “Division A Teams,” including 3M, Dover, Emerson Electric and Procter & Gamble. The Division A teams have acceptable current yields and are at or near their 52-week highs. Call them your big conference teams “playing well late in the season” with potential to stretch their wins deep into tournament play.

This time I want to talk about the four “Division B Teams.” The Division B teams have good current yields and are at relatively attractive prices for entry. Call them your smaller conference championship teams with potential for a few Cinderellas to emerge.

To buy or not to buy (i.e. repair instead), that is the question.

Headquartered in this year’s College Basketball Capital of the World (Atlanta, GA), this final four contender continues to profit specifically due to the current economic malaise. Genuine Parts Company distributes automotive and industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, the Dominican Republic, Mexico, and Canada. In a period where individuals, companies and large conglomerates are putting off buying new and making due with maintaining the vehicles they have, GPC is playing well. The GPC team supplies replacement parts for imported vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles, farm vehicles, small engines, farm equipment, and heavy duty equipment. Setting a new 52 week high recently  while still showing off a 2.8% current yield, GPC and its $13+ billion in annual revenues demands respect.  In a game where repair and replacement continues to remain in favor over buying new, this PTP (Prime Time Player, Baby!) stands to play well for a long time yet.

Doing it the Chicago Way since 1883.

Straight from the heart of the Midwest, the Integrys Energy Group, Inc. team has a win record that is envied by many. With a current yield of 4.7% and a phenomenal record of raising dividends, Integrys makes for a great entry on anyone’s bracket. The team’s nucleus is made up of four outstanding players: Natural Gas Utility, Electric Utility, Electric Transmission Investment, and Integrys Energy Services, while also possessing a strong bench. One of the strongest “6th man” support groups in the tournament, Integrys counts on support from approximately 1,690,000 residential, commercial and industrial, transportation, and other customers in Chicago and its northern suburbs; northeastern Wisconsin and portions of Michigan’s Upper Peninsula; various cities and communities throughout Minnesota, and the southern portion of lower Michigan. It also draws support from approximately 495,000 customers in northeastern Wisconsin. With that kind of 6th man support and its record for success, TEG makes a strong statement as a great player in Division B.

Not a “lock” for the championship, but a good bet.

Another great contender in the division based out of North Canton, OH is Diebold . Team Diebold has a foundation based on providing self-service delivery and security. They’re a team made up of “everyman players,” the kind you’re likely to see on the sidewalk beside you. Their players include pneumatic tube systems for drive-up lanes, vaults, safes, depositories, bullet-resistive items, and undercounter equipment; electronic security products, such as digital surveillance systems. These players may not be individual superstars, but when placed under the management and coaching of Diebold’s fine leadership, they make a formidable team with an outstanding win record. With a current yield of 3.8% and just off of its 52 week low of $27.59, Diebold may make a good choice for your bracket.

A quiet little Cinderella that could make a great dance partner.

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