Proud to Own Series
Each Wednesday, we highlight a core portfolio holding within our Faith-Based 100 Index, and show why it is a part of our “Proud to Own” universe.
As a reminder, for the company to be included in our “proud to own” universe, it must meet three criteria:
1. It must not violate your faith and values. Some of the types of companies we can avoid include those involved in the abortion industry, those producing explicit entertainment and pornography, those conducting embryonic stem cell and fetal tissue research, companies funding and lobbying for homosexuality, those involved in vices like alcohol, tobacco and gambling and companies that are abusing the environment.
2. It should be a company that complements your faith and values. This involves finding companies: Helping the poor and defenseless; Protecting the sanctity of human life; Producing morally sound entertainment; Finding cures for life threatening diseases; and Improving the society we live in…
3. It should be a company with strong profit potential. This involves finding companies in solid financial condition that have strong profit potential and/or provide strong cash flows via dividends. We use a five-point inspection to evaluate each investment we are considering. We analyze a company’s earnings potential, price momentum, risk, financial health, and its current valuation. Our goal is to find quality companies that stay true to your values AND are profitable! This is not an either /or scenario but rather a winning combination.
This Week’s Highlighted Company
Infrastructure is the foundation of our civilization. It consists of the basic physical and organizational structures and facilities (buildings, roads, and power supplies) needed for the continuity of our society.
- A family in Honolulu sits down to a freshly-cooked dinner.
- In the Southwest, a child switches on a reading lamp lit by solar power.
- In Tulsa, the pilot of a small jet refuels and de-ices during a winter cold snap.
- Workers in a Chicago high-rise remain productive during a summer heat wave.
All of these people, and tens of thousands more, directly benefit from the services offered by the Macquarie Infrastructure Company. Source: Eventide
Macquarie Infrastructure Company (NYSE: MIC) owns, operates and invests in a portfolio of infrastructure businesses. Infrastructure businesses are the providers of the basic, often essential, services, facilities and technology upon which the growth and development of a modern community depends. MIC offers investors an opportunity to participate in the ownership of such businesses.
MIC’s businesses consist of one of the largest bulk liquid terminals businesses in the U.S., an airport services (FBO) business, a gas processing and distribution business, and a portfolio of contracted power and energy investments, consisting of controlling interests in five solar and two wind power generation facilities.
Infrastructure businesses are the providers of the basic, often essential, services, facilities and technology upon which the growth and development of a modern community depends. Infrastructure businesses tend to generate sustainable and growing long-term cash flows as a result of relatively inelastic customer demand for the services they provide.
Characteristics of infrastructure businesses include:
- Provision of a basic, often essential services;
- Operations within a regulated or contractual framework;
- Consistent, relatively inelastic demand throughout economic cycles;
- Operations in sectors with high barriers to entry, which create sustainable competitive advantages;
- Long-lived, high-value physical assets that are difficult to replicate or substitute around;
- Predictable maintenance capital expenditure requirements; and,
- Scalability, such that relatively small amounts of growth can generate significant increases in earnings before interest, taxes, depreciation and amortization, or EBITDA.
In addition to the benefits associated with these characteristics, revenues generated by our infrastructure businesses generally grow with inflation. Revenue growth is a function of the price escalators built into many customer contracts and the inflation and cost pass-through adjustments typically a part of pricing terms in patronage businesses or those provided for by the regulatory process in the case of regulated businesses. These provisions serve to insulate infrastructure businesses to a significant degree from the negative effects of inflation and commodity price risk.
Macquarie Infrastructure Company (MIC) is a company we can be “proud to own”.