{"id":2359486,"date":"2021-09-13T08:54:11","date_gmt":"2021-09-13T12:54:11","guid":{"rendered":"https:\/\/www.valuewalk.com\/?p=2359486"},"modified":"2023-05-18T18:24:55","modified_gmt":"2023-05-18T22:24:55","slug":"lakeland-move-over-delta-meet-lambda","status":"publish","type":"post","link":"https:\/\/www.valuewalk.com\/lakeland-move-over-delta-meet-lambda\/","title":{"rendered":"Lakeland: Move Over Delta, Meet Lambda"},"content":{"rendered":"<p>ValueWalk will be hosting its Actionable Small Cap Webinar on Friday, September 17th, 2021. It will be featuring David Schneider, Assistant Portfolio Manager\/Analyst at Hoover Investment Management.<\/p>\n<p><a href=\"https:\/\/www.valuewalk.com\/sign-email\/\">Sign up for ValueWalk&#8217;s newsletter<\/a> and stay upto date.<\/p>\n\n\t<!-- Begin Mailigen Signup Form -->\n\t<script type=\"text\/javascript\">\n\t\tif (typeof jQuery == 'undefined') {\n\t\t\tdocument.write('<scr' + 'ipt type=\"text\/javascript\" src=\"https:\/\/list.mailigen.com\/js\/jquery.js\"><\/scr' + 'ipt>');\n\t\t}\n\t<\/script>\n\t<script language=\"javascript\" type=\"text\/javascript\" src=\"https:\/\/list.mailigen.com\/js\/scripts.js\"><\/script>\n\t<script language=\"javascript\" type=\"text\/javascript\" src=\"https:\/\/list.mailigen.com\/js\/subscribe2.js\"><\/script>\n\t<div id=\"MG-placeholder\">\n\t<style>.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important}\n\n\tform.ebook-styles .error,\n\tform.ebook-styles #error {\n\t\tcolor:#d00;\n\t}\n\tform.ebook-styles .formfields h1,\n\tform.ebook-styles .formfields #mg-logo,\n\tform.ebook-styles .formfields #mg-footer {\n\t\tdisplay: none;\n\t}\n\tform.ebook-styles .formfields {\n\t\tfont-size: 12px;\n\t}\n\tform.ebook-styles .formfields p {\n\t\tmargin: 4px 0;\n\t}\n\t<\/style>\n<div style=\"background:#eee;display:block;overflow:hidden;margin-bottom:24px;padding:40px;\">\n<div class=\"two-thirds first\">\n<p style=\"font-size:22px;margin:0 0 10px;\">Get The Full Warren Buffett Series in PDF<\/p>\n\t<p style=\"line-height:1.4;margin-bottom:0;\">Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues<\/p>\n\t<form action=\"https:\/\/valuewalk.us4.list-manage.com\/subscribe\/post?u=c3eb7a1d092fc854772c834e0&amp;id=f6f5bdb8b5\" method=\"post\" id=\"mc-embedded-subscribe-form\" name=\"mc-embedded-subscribe-form\" class=\"validate\" target=\"_blank\" novalidate>\n <div id=\"mc_embed_signup_scroll\">\n \n\t\t\t\t<div class=\"af-element mc-field-group \">\n\t\t\t\t\t<div class=\"af-textWrap c1\"><input type=\"email\" value=\"\" placeholder='Email Address' name=\"EMAIL\" class=\"required af-element email\" id=\"mce-EMAIL\"><\/div>\n\t\t\t\t\t<div class=\"af-clear\"><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"af-element buttonContainer\">\n\t\t\t\t\t<input type=\"submit\" value=\"Subscribe\" name=\"subscribe\" id=\"mc-embedded-subscribe\" class=\"button\">\n\t\t\t\t<\/div>\n \n \n\t<div id=\"mce-responses\" class=\"clear\">\n\t\t<div class=\"response\" id=\"mce-error-response\" style=\"display:none\"><\/div>\n\t\t<div class=\"response\" id=\"mce-success-response\" style=\"display:none\"><\/div>\n\t<\/div>    <!-- real people should not fill this in and expect good things - do not remove this or risk form bot signups-->\n    <div style=\"position: absolute; left: -5000px;\" aria-hidden=\"true\"><input type=\"text\" name=\"b_c3eb7a1d092fc854772c834e0_f6f5bdb8b5\" tabindex=\"-1\" value=\"\"><\/div>\n    \n    <\/div>\n\t<\/form>\n\t<script type='text\/javascript' src='\/\/s3.amazonaws.com\/downloads.mailchimp.com\/js\/mc-validate.js'><\/script><script type='text\/javascript'>(function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true);<\/script>\n<\/div>\n<div class=\"one-third\">\n<img decoding=\"async\" src=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2017\/06\/Warren-Buffet-Charlie-Munger-ValueWalk-compound-interest.jpg\" alt=\"Warren Buffett eBook\" style=\"width:100%; height:auto\">\n<\/div><\/div><\/div><!-- End Mailigen Signup Form -->\n<p style=\"text-align: center;\"><a href=\"https:\/\/valuewalkpremium.com\/q2-2021-hedge-fund-letters\/\" target=\"_blank\"><em><strong>Q2 2021 hedge fund letters, conferences and more<\/strong><\/em><\/a><\/p>\n<div class=\"ca-widget\" data-token=\"s1200a4dc6f6\"><\/div>\n<p><script async=\"\" defer=\"\" src=\"https:\/\/secure.money.com\/embeds\/embedder.js?v=1\"><\/script><\/p>\n<p><em>Lakeland Industries, Inc. (NASDAQ:LAKE) - $22.31<\/em><\/p>\n<p>With global headquarters in Alabama, Lakeland Industries is a worldwide leader in high performance safety workwear and protective clothing.\u00a0 Products can cover you from head to toe, protecting you from caustic chemicals, fire, knives, and biological <a href=\"https:\/\/www.valuewalk.com\/china-coronavirus\/\">threats<\/a>.\u00a0 The products for biological threats can be found <a href=\"https:\/\/www.lakeland.com\/us\/products\/critical-environments\" rel=\"nofollow\" target=\"_blank\">here<\/a>.<\/p>\n<h2>LAKE's Monster Earnings<\/h2>\n<p>LAKE is on a January fiscal year and for the year ending Jan 2021 reported monster earnings of $4.31 per share, with free cashflow after everything of $4.79 per share.\u00a0 The company did well supplying protective gear to healthcare workers globally due to covid.\u00a0 When the vaccines came out, the stock began to head south based on the assumption that their big year was a onetime event.\u00a0 But the windfall earned from round 1 of the pandemic threw a lot of cash on the balance sheet and as of April, 2021 they had $7.25 per share in cash.\u00a0 Longterm liabilities are only 1 million.\u00a0 Net-Net working capital was $13.67 per share.\u00a0 The company has 2 sellside firms following it.<\/p>\n<p>CNBC and other drinking bird media companies talk ad nauseum about the Delta variant of covid and how it is an issue for those who have not had their 2 vaccination shots.\u00a0 South America and Mexico are a big unreported problem for those in the USA. \u00a0South America is dominated by the <a href=\"https:\/\/www.valuewalk.com\/jj-covid-vaccine-sales-2-5-billion-2021\/\">Lambda variant<\/a>, not the Delta variant and we have a porous southern border (to put it mildly) \u00a0It is no surprise that the first case in the US with this was found in a border state \u2013 Texas. \u00a0Texas and other border states are more conservative and have less success in vaccinations than states such as NJ. We already know that the Delta variant is more easily transmitted than the original strain. Some scientists think that <a href=\"https:\/\/www.nationalgeographic.com\/science\/article\/the-unusual-lambda-variant-is-rapidly-spreading-in-south-america-heres-what-we-know\" rel=\"nofollow\" target=\"_blank\">Lambda may be worse than Delta<\/a>. For those here in the USA who have received the Pfizer or Moderna vaccine, you are luckier than many millions worldwide who have received the Chinese CoronaVac vaccine, the mis-hyped AstraZeneca vaccine, or many others.\u00a0 \u00a0The CoronaVac vaccine is the dominant vaccine in Latin America.\u00a0 The problem with the use of suboptimal vaccines is that due to natural selection \u2013 thought of by somebody named Darwin, we are left dealing with many unknowns regarding how transmitting that surviving virus will be different from what existed before.\u00a0\u00a0 \u00a0I agree with the belief that if you are unvaccinated, you run an exceptionally high risk of getting Covid.\u00a0 Within one person, you can also have more than one subtype of virus, but that is beyond the scope of this report.\u00a0 It is likely that within a week or two of publication of my tidy note, the news media in the US will be discussing the Lambda variant more, and its possible interaction with Delta.<\/p>\n<p>Despite moderate complacency in the US, covid is spreading rapidly OUS \u2013 for example Indonesia, Phillipines, etc.\u00a0 Fortunately for Lakeland, they can distribute globally and have operations detailed <a href=\"https:\/\/www.lakeland.com\/us\/locations\" rel=\"nofollow\" target=\"_blank\">here<\/a>. From the 10-k \u2013 \u201cIn addition to the United States, sales are made to more than 50 foreign countries, the majority of which were into <a href=\"https:\/\/www.valuewalk.com\/china-is-winning-the-economic-war\/\">China<\/a>, the European Economic Community (\u201cEEC\u201d), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India and Southeast Asia.\u201d<\/p>\n<p>Manufacturing is in 6 countries: USA, Vietnam, India, China, Mexico, Argentina with recent expansions in Mexico, India, and Vietnam.<\/p>\n<p>Asian distribution can be handled by sales offices in Australia, India, and China.\u00a0 They sell directly to end users and through other distributors.\u00a0 Although the USA historically has been the largest customer of LAKE\u2019s products, that can change due to Covid.<\/p>\n<p>Sellside consensus numbers:<\/p>\n<p><a href=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2021\/09\/Lakeland-Industries-NASDAQLAKE.png\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-2359501\" src=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2021\/09\/Lakeland-Industries-NASDAQLAKE.png\" alt=\"Lakeland Industries NASDAQ:LAKE\" width=\"1270\" height=\"1202\" srcset=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2021\/09\/Lakeland-Industries-NASDAQLAKE.png 1270w, https:\/\/www.valuewalk.com\/wp-content\/uploads\/2021\/09\/Lakeland-Industries-NASDAQLAKE-300x284.png 300w, https:\/\/www.valuewalk.com\/wp-content\/uploads\/2021\/09\/Lakeland-Industries-NASDAQLAKE-768x727.png 768w\" sizes=\"(max-width: 1270px) 100vw, 1270px\" \/><\/a><\/p>\n<h2>Announcement Of A Buyback Program<\/h2>\n<p>What to do with all that balance sheet cash?\u00a0 On Feb 17, 2021, they announced a $5 million buyback program.\u00a0 They were essentially refilling a buyback authorization that was close to running dry.\u00a0 With the stock tanking due to the belief that covid has ended, they put in a new $5 million authorization on July 7.\u00a0 Since May 1 through July 7, LAKE bought back 227,454 shares at an avg price of $22. The most recent ownership data I have is from the end of March, and due to <a href=\"https:\/\/www.valuewalk.com\/logica-capital-july-2021-commentary\/\">volatility<\/a> \u2013 I assume it is quite stale.\u00a0 The stock is at the level where the company bought back a lot of stock.\u00a0 The virus is growing outside the USA to the point where governments themselves may be threatened.\u00a0 A new report from South America based Credicorp Capital\u2019s Andean Covid-19 Monitor dated 7\/19 shows % Covid positive rates in a few countries.<\/p>\n<p>Columbia \u2013 9%, Mexico \u2013 33.4%, Peru \u2013 13.9%, Chile \u2013 8.9%, Brazil 35.7% \u00a0\u00a0Mexico, Brazil and Peru are the frightening laggards in simply testing the population.\u00a0 In my opinion, those 3 are powder-kegs.<\/p>\n<p>The Opportunity:\u00a0 Movement in the stock is shared between short term traders vs. investors.\u00a0 The traders are relying on moving averages, overbought\/oversold indicators, etc.\u00a0 They have never looked at a balance sheet or statement of cash flows.\u00a0 Rational investors look at traders as prey. \u00a0The prey creates opportunities for <a href=\"https:\/\/www.valuewalk.com\/value-investing\/\">investing<\/a>.\u00a0 \u00a0The ownership profile of Lakeland as of the end of March is dominated by US owners.\u00a0 The virus is global.\u00a0 Lakeland distributes globally and has manufacturing in Mexico and Argentina that can easily address the explosion south of our border.\u00a0 They are ready to supply in the far east, also.<\/p>\n<p>For quant nerds, as the share count decreases ROI, ROE etc rise.\u00a0 Over the past few years, Lakeland has, in their spare time diversified raw material sources to improve the gross margin profile, regardless of covid or no covid.\u00a0 The SKU count has dropped, creating more operating leverage.<\/p>\n<p>In 12 months, we will be looking at LAKE on cal 23 numbers.\u00a0 Depending on buybacks, I am figuring about $9-$10 per share in cash with no debt, and \u201cnormalized\u201d earnings of $2.25.\u00a0 Net-Net working capital might be close to $14.\u00a0 A simple 13 multiple on $2.25 = $29.25 but you must add the excess cash to that which gives a back of envelope target of $39<\/p>\n<p>What if I am wrong?\u00a0 Given the balance sheet and company buyback with what I believe are abnormally strong numbers coming for longer than is embedded in the stock price, you could have dead money.\u00a0 So, a flat stock or a stock that could be close to double in a year is not too shabby.<\/p>\n ","protected":false},"excerpt":{"rendered":"<p>ValueWalk will be hosting its Actionable Small Cap Webinar on Friday, September 17th, 2021. It will be featuring David Schneider, &#8230; <a title=\"Lakeland: Move Over Delta, Meet Lambda\" class=\"read-more\" href=\"https:\/\/www.valuewalk.com\/lakeland-move-over-delta-meet-lambda\/\" aria-label=\"More on Lakeland: Move Over Delta, Meet Lambda\">Read more<\/a><\/p>\n","protected":false},"author":21877,"featured_media":2359501,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"no","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[6640,10463,6547,10691],"tags":[590128],"states":[],"acf":[],"modified_by":"Umair Tariq","_links":{"self":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2359486"}],"collection":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/users\/21877"}],"replies":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/comments?post=2359486"}],"version-history":[{"count":1,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2359486\/revisions"}],"predecessor-version":[{"id":2465512,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2359486\/revisions\/2465512"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media\/2359501"}],"wp:attachment":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media?parent=2359486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/categories?post=2359486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/tags?post=2359486"},{"taxonomy":"states","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/states?post=2359486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}