Boasting a current dividend yield of ~7% with no debt (a rare combination), and with the stock down over 50% from 2017 highs, I thought this would be an interesting stock to research from a value perspective.

ZCL is North America’s largest manufacturer of fibreglass reinforced plastic underground storage tanks.  The majority of their revenue is derived from selling these tanks to gas stations which are designed to be corrosion resistant and avoid environmental contamination.

Key discussion points include:

  • Long track record of profitable results, with decent revenue growth driven by fuel tank replacement cycle
  • Weak Q2 2018 results with lower revenue and margin compression versus the prior year
  • Recent strategic review was concluded in Q1 2018 without a successful transaction
  • New CEO, Ted Redmond, taking over in September 2018