US Forgotten Value Fund: 3 stocks to note

In a recent webinar, Jonathan Boyar, Principal Advisor to the MAPFRE AM US Forgotten Value Fund suggested three stock ideas.

The fund is available through the MAPFRE AM Sicav based in Luxembourg, and takes an agnostic approach to market cap size and sector exposure; he considered:

1. Carrier [Ticker: CARR]

·         Carrier is presented as an HVAC (heating, ventilation and air conditioning) and climate solutions company with significant growth potential.

·         The company has a strong brand, significant recurring revenue, and is simplifying its business via divestitures.

·         Regulatory tailwinds in Europe and a recent acquisition of a climate solutions business are highlighted as growth drivers.

·         Despite its strong performance, Carrier is seen as having significant upside potential with reasonable valuation multiples.

Boyar says:

“One of the things that that it brings to the table is the heat pump business. There are about 200 million homes in Europe and about 8.5 million heat pumps. So, there’s lots of room for growth.”

2. SS&C Technology [Ticker: SSNC]

·         SS&C Technology is profiled as a technology business with a strong competitive position and exposure to AI trends.

·         The company has a significant amount of recurring revenue, high margins, and a sticky business model.

·         SS&C Technology’s founder, Bill Stone, owns a significant stake and could potentially make an opportunistic bid for the company.

·         The stock is seen as inexpensive, with potential for significant upside based on its attractive valuation and turnaround potential.

Boyar says:

“The business has a lot of attractive attributes, significant amount of recurring revenue, high margins, leading market position. And it’s a very, very sticky business. Even during the great financial crisis, retention rates did not go below 90% which is extremely impressive.”

3. Global Payments (Ticker: GPN)

·         Global Payments is described as a boring but cheap and high-quality business in the payment services sector.

·         The company allows businesses to accept diverse forms of payment and helps financial institutions manage card portfolios.

·         Global Payments plans to return 26% of its market cap to shareholders via dividends and buybacks.

·         The company is seen as resistant to FinTech disruption, with consistent revenue growth, high profit margins and a new CEO streamlining operations.

Boyar says:

“There’s a lot they can do to unlock value, and they’re doing it. They plan on returning about 26% of the market cap to shareholders over the next three years via dividends and buybacks, and we think that’s a great use of capital given how cheap the company is.”