D.A. Davidson, an investment bank known for its Montana roots, has introduced a new initiative called the Best-of-Breed Bison Initiative, aimed at identifying high-quality stocks. The choice of the bison as its symbol is based on the animal’s rarity and Montana’s association with the species. The bank emphasizes that it avoids following the herd mentality in its stock-picking approach and instead focuses on factors such as strong balance sheets, cash flows, and enduring moats. The article highlights seven small to midsize companies that are part of the Davidson list, including Axos Financial, Brunswick, WD-40, Encore Wire, Trex, Jack Henry & Associates, and Nordson.
Axos Financial is a holding company for Axos Bank, known for its online operations and competitive rates. Brunswick, a company originally known for billiard tables, now manufactures boats and other components and has seen rising market share. WD-40, famous for its spray lubricant, has experienced significant growth and shareholder returns. Encore Wire benefits from infrastructure construction and electric vehicle adoption. Trex is a leading player in the market for lumber alternatives used in decking. Jack Henry & Associates provides software and technology solutions to small and midsize banks. Finally, Nordson, a company specializing in machinery and coatings, has been a strong long-term performer.
Overall, the Davidson list offers an interesting selection of small to midsize companies with potential for long-term growth. The bank’s approach of focusing on high-quality stocks with enduring moats sets it apart from other broker-dealers. While some of the stock ratings may seem contradictory to the Best-of-Breed Bison Initiative, Davidson explains that the selection of stocks is based on longer-term returns, while ratings reflect more immediate expectations. The article emphasizes that the stocks listed should be carefully considered by investors due to their potential for upside, strong market positions, and promising growth prospects.