Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Keep Eye on Cash Conversion Cycle

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Keep Eye on Cash Conversion Cycle

Article excerpt

Failure to envision the future objectively is not limited to governments or the media. A few days before the 1929 market crash, Irving Fisher, a well-known monetary economist, confidently predicted that, "Stock prices have reached what looks like a permanently high plateau." For months after the market crashed, he continued to assure investors that a recovery was just around the corner.

Fisher was blindsided by personal bias. Letting emotions or bias color your investment strategy will be expensive. You must remain unemotional as you search for investment candidates. Consider for example Owens & Minor (OMI).

OMI is a leading national distributor of medical and surgical supplies, while at the same time offering global third-party logistics services to pharmaceutical, life-science and medical- device manufacturers through OM HealthCare Logistics and its European business unit, Movianto.

With distribution centers throughout the United States, OMI serves hospitals, integrated health care systems, alternate site locations, group purchasing organizations, health care manufacturers and the federal government. It also provides technology and consulting programs that improve inventory management and streamline logistics across the entire medical supply chain.

When I first wrote about the company a year ago, my earnings estimate for 2013 was $1.92 per share, with a 12-month target price on the shares of $36. As it turned out, the actual results were a bit lighter than my estimates with earnings coming in at $1.90, while the shares recently closed at $35.30.

OMI's 131-year operating history has brought forth exceptional corporate culture and expertise, as well as scale and scope advantages that are virtually unrivaled. Moreover, given the underpenetrated and competitively fragmented marketplace in which it competes, OMI's relative revenue stability and future growth rate is most likely assured. …

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