Geek Toy of the Future

Lets start this analysis with a company I just recently purchased. Well first lets start with where I got the funds for this new stock. I recently sold off some stock that was ahead (BUD and APCC). One of the more difficult things to do in life is to sell a stock which is going up, but once in a while it's important to actually realize a profit on a stock, especially when you feel it's reaching its upper limits. I was a bit concerned about BUD's 3Q 06 profits report so sold right before them. Turns out I didn't have a whole lot to worry about. But, I'm happy with the sale, the stock has been on a minimal decline since the report. APCC is a stock I bought a couple years ago at around $16. It was up and down for a while and just recently got bought out by another company. The stock hit $30 and I decided it was time to realize some profits there as well.

But alas, I stray from todays topic. Today we are going to look at a company called Garmin (GRMN).

Lets start with the basics...

G, what does this company do?

In a nutshell they produce GPS related devices for consumer, marine, and aviation industries. The company formed in 1989 and currently has a market cap of 10 billion dollars. It's probably best if you just read their website for the details.

G, where did you find this company?

I'm by my very nature, a value investor (sometimes referred to as a cheapskate). I'm always on the look out for good companies that get punished for one reason or another un-fairly by the market. Of course you need to be careful playing this game, a lot of the times the market correctly punishes a company.

I was actually contemplating a gamble on a genetic company (LEXG) when I ran across the headlines for Garmin. A 15% drop in one day, that has value written all over it!

G, why do you like this company?

The company reported a revenue climb of 62% and it's stock price dropped 15%! Yes, I admit it, that's what caught me up initially. I even paid the $15.95 fee in sharebuilder just so I could get in cheap. What kind of ticks me off is I've actually had a garmin GPS for over three years. My dad bought it for me to go geocaching. It's a fun hobby that gets you to a lot of different, neat locations throughout the US (basically people hide containers with little knick knacks in them, they record the coordinates using a GPS, post them to the geocaching web site, another user then downloads those coordinates, finds the container using their GPS, signs a log within the container, and then logs the find up on the geocaching web site). Yes I know that was a terrible sentence. Geocachers then figure out who has the bigger ying yang by comparing who has the most container finds logged up on the web site. I just wish I'd recognized the "coolness" factor of it three years ago. In fact, it's probably a good idea to keep an eye on the company that runs geocaching.com, Groundspeak Inc. Might be some potential there some day.

Every day I turn the corner, I see a new GPS device. In a cell phone, in a new car, in a freaking watch! The possibilities just seem endless. That's another point I always try to make when investing. The product needs to make sense. It needs to be something I see value in, not just something that makes money (take for example one of my best performing stocks, BUD, I think I see a bit to much "sense" in this company at times...).

G, give me the details.

I'll plug financial details in here to show key financial statistics over the last three years (once I stop being lazy).

G, you got any good links about Garmin?

• A good blog post with some analysis on Garmin.
• I like the idea of a company giving back to it's employees.
  

G, what did it cost you?

I purchased it for $46.84 on 11/03/2006.