Adding Logitech International LOGI US American Depository Receipt

I am adding Logitech International’s US $ ADR to both the Income and Growth Portfolios. Logitech is a Swiss holding company that makes a range of products including computer mice, keyboards, wireless speakers, headphones, gamepads and steering wheels.

The company is benefiting from the new secular trends in video gaming, rise in E-sports and competitive PC gaming and in video collaboration devices used in business.

The company has a strong balance sheet with no long term debt. The company is a large generator of free cash flow that can be used to buy back stock, increase the dividend and to make acquisitions.

The revenues are expected to remain strong in fiscal 2020 with growth in the range of mid to high single digits. The fiscal year end for 2019 was March 31st. Non GAAP Earnings Per Share are expected to rise 5.7% in fiscal 2020 and rise by almost 12% in fiscal 2021. The stock is trading at a little over 18 times fiscal 2020 earnings and 16.5 times 2021 earnings. Gross margins are expected to remain high at 38%.

The dividend yield is 1.78% and the cash dividend payout is a very manageable 42.33%.

 

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