As major market indices approach correction territory, many investors are wondering where they can find safe places for their money. We’ll be honest with you – there are no easy answers. In fact, picking stocks is only getting tougher now that strategies like MOMO and FOMO aren’t working.

Ever wonder, if, maybe, picking stocks was supposed to be hard? Maybe, having efficient markets means that piling into popular stocks is not a viable strategy. Given the choice, we would take having an efficient market over easy-money investing strategies all day long and twice on Sundays.

Efficient markets are not only better for society, but they are also the only type of market that can survive long term. Inefficient markets, inevitably, devolve into big losses for everyone except those that can bully or cheat the best.

So, do we see a silver lining in the volatility in the market today? Yes, we do, and our research is perfectly suited to helping investors outperform in this environment. You know the saying…when the going gets tough, the tough get going. New Constructs is the toughest research company in the world.

This week’s new Long Idea is a great example of a good, tough stock. This company boasts industry leading market share, is growing its profits, and its stock has gotten much cheaper over the last few months.

Below, we present a large excerpt from our latest Long Idea report published this week, available to Pro and Institutional members. You can buy the full report a la carte here.

We’re not giving you the ticker for this pick, but we are happy to share our hard work because we want you to see how good our research is.

This stock offers favorable Risk/Reward based on the company’s:

  • diverse and innovative product offering,
  • sales growth in all segments,
  • falling operating costs,
  • highest profitability among peers, and
  • cheap stock valuation.

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Strong Fundamentals Across Decades

This company is unique, in that despite not being a flashy tech company, it has consistently grown its top- and bottom-line for more than two decades straight.

The company has grown revenue by 4% and net operating profit after-tax (NOPAT) by 8% compounded annually since 1998. See Figure 3 from the full report.

The company improved its NOPAT margin from 9% in 1998 to 25% in 2024 while invested capital turns fell from 1.4 to 0.9 over the same time. Rising NOPAT margins are enough to offset falling invested capital turns though, and, drive return on invested capital (ROIC) from 12% in 1998 to 22% in 2024.

Additionally, the company’s Core Earnings grew 8% compounded annually from $322 million in 1998 to $2.5 billion in 2024.

Figure 3: Revenue and NOPAT Since 1998

Sources: New Constructs, LLC and company filings

Building a More Efficient Operation

This company is not just the most profitable amongst its competitors, but it is consistently building a more efficient operation too. Since 2017, the company has decreased operating expenses across the board.

From 2017 to 2024, as a percent of revenue, the company’s cost of sales fell from 54% to 53%, its selling, marketing, & administrative expense fell from 25% to 21%, and its business realignment costs fell from 3% to 0%.

The company’s total operating costs fell from 82% of revenue to 74% of revenue over the same time.

Figure 5: Expenses as a Percentage of Revenue From 2017 to 2024

Sources: New Constructs, LLC and company filings

….there’s much more in the full report. You can buy the report a la carte here.

Or, become a Professional or Institutional member – they get all Long Idea reports.