Conventional wisdom has it that investors should look for companies with consistent profitability and growing revenue. No doubt, that is a potent combination, but the difficulty is that such enterprises are seldom cheap, so they require a “buy high, sell higher” approach.
The company has a remarkable history of profitability, but the magnitude has waxed and waned from an EPS high of US$1.04 in 2019 to 56 US cents in both 2022 and 2023. The dividend has been even more erratic, fluctuating from a generous $1.42 in 2017 to a thin dime last year. Talk about feast or famine!
UG has a lovely balance sheet. Not only does it have no debt, but it has a considerable rainy-day fund that is invested in various securities. Warren Buffett has long grumbled about how GAAP market-to-market rules - the generally accepted accounting principals businesses are required to follow - on such assets obscure a corporation’s true earnings power. It is a rather nice problem to have, but it does increase bottom-line volatility.