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I am a firm believer in Peter Lynch's famous stock picking maxim, "invest in what you know". Over the years, I have trained myself to have a keen eye to spot companies and trends in the marketplace that are either unique or little known leaders in a field. Several mornings ago, I stopped by the local bank; it had not opened yet for the day, so I decided to make my deposit via the ATM machine in the lobby. I normally do not make deposits in this manner and was impressed with the efficiency and ease of the transaction.
I noticed that the company that made the machine was Diebold (DBD | Quote | Chart | News | PowerRating), making a mental note of it for further research. The name rang some bells, as I connected them with old-time bank safe/vault making but I didn't know much more so I decided to dig deeper.
When I discovered that the company has a Long Term Power Rating of 10, my interest was definitely peaked. 10-rated stocks have been proven to possess an 81% chance of being higher one year later, plus have less relative volatility thus be perfectly suited for prudent long term investment. With this said, here is a brief overview of the company.
Diebold was formed in 1859 as a manufacturer of bank vaults and safes. They expanded into files, microfilm, and armor plating for the military in the 1930's. The company then moved into banking security systems and drive up banking products. An interesting side note is that popular crime fighter of "Untouchables" fame Elliott Ness served as Chairman of the Board from 1944-1951. In 1973, they introduced a fully automated banking system. This machine was transformed in 1977 to serve as an ATM.
On a financial note, Diebold has increased yearly dividends to the stockholders every year since 1954. They have just announced preliminary second quarter revenue increase of 11% and a year to date increase of 9.3%. They have raised revenue expectations and reaffirmed operating margin targets for the year. The company is used by the Bank of China and was chosen as the ATM provider in key facilities for the 2008 Beijing Summer Olympics. Banco do Brasil has just added 5,400 more Diebold ATM machines to its self service fleet, further emphasizing the true international impact of the company.
Technically, Diebold is trading nicely above the 50-day Simple Moving Average and has been in a steep uptrend since mid August.
The 10 Long Term Power Rating, combined with the financial strength, positive news, innovative history, international expansion and technical picture truly makes Diebold a company to consider for your long term portfolio.
David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.
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