Thirty million people around the world get paid to look at things, and almost every one of them is worse at it by lunchtime than they were at breakfast.
That is the job. You stand at a line, parts go past, and you decide which ones are good enough to ship. Is the cap on straight? Is the paint scratched? Is that a defect or just a shadow? A person can do this well for about an hour before their eyes get tired and things start slipping through, which is why factories have been trying for forty years to hand the work to a camera instead.
One company has spent its entire life on that problem. It was founded in 1981, it made the first machine of its kind, and its first paying job was reading serial numbers off computer chips.
I did not find it on a screener. I found it on a podcast, one of those hour-long episodes where a guest walks through a single business and you keep stopping to write things down, and I wrote down a lot. Then I went back and read the last five earnings calls in full, because the episode was recorded before the good part happened. This piece is what came out of all those notes.
Two years ago the business looked finished. Its biggest customers had stopped building things, sales were shrinking, and profit had fallen from more than thirty cents on the dollar down to thirteen. Anyone who bought the stock early spent two miserable years being told they were wrong.
Then a new CEO took over.
Eight quarters in a row of sales growth since. Eight quarters in a row of fatter margins. Last quarter the company earned 32 cents of profit on every dollar of sales, up more than eleven points in twelve months, and earnings per share are on track to grow roughly 63% this year. In August management did something they had never done at that point in a year, because for the first time in a long time they could actually see what was coming.
Below I tell you the name and the ticker. I explain what they make in plain words, walk through the three things that turned this around, put all the real numbers in front of you, and show you the brand new market that could become the next engine. I also give you the bear case, because there is a good one, plus the handful of things I am watching to know if it keeps working.
