At Surge Capital, we follow a consistent framework & approach of looking for six key factors which we believe are primary drivers of a company’s long-term earnings growth-
A combination of multiple of these drivers provides for very strong platform for a business to grow. And we look for atleast one or more of these six attributes in our stock selection framework.
In this post, we will highlight the factor of Change & External Trend with the example of Dollar Industries.
Change & External Trend is a powerful attribute on its own given that not only does it affects a company’s growth trajectory but it also has material impact on a stock’s valuations.
An internal change in a company can act as a key catalyst that can create a good earnings trend. Like a change from a not so good management to an aggressive management; or divestment of some business unit. Sometimes, an external trend is what allows a company to grow at high rates year-after-year for long durations.
Dollar Industries is one of the leading players in mass-underwear segment. Historically, traditional players in this segment have operated under a push-based wholesale model which has multiple challenges of-
No Visibility on Retail Sales
Poor Business Economics for Distributors
Large Receivables
Over last few years, Dollar under its project Lakshay has been implementing a major change in how it operates. Under the project Lakshay the company is moving towards a direct distribution model which addresses all the issues of a wholesale distribution model.
Readers can access our full research report on Dollar Industries on our shared research page to understand this change and its positive impacts for the company.