May 9, 2011
Collectors Universe CLCT Post Record Quarter For Shareholders
Those that like to invest their money in something other than cardboard can look into Collectors Universe (NASDAQ: CLCT) otherwise known in the hobby world as the card grader: PSA.
The company makes most of its profits grading gold & silver coins, however most sports trading card collectors know them as one of the leaders in the grading and authentication world. The best thing about Collectors Universe being public, is that we get to see exactly how many cards they grade each quarter. They actually saw growth in the Sports Card & Autograph segment for the second consecutive quarter:
January 1 – March 31
PSA Graded Cards & Autographs (PSA/DNA)
# Of Units Graded:
- 2010: 317,500
- 2011: 340,200
That’s good for 37% of total business, not bad considering the executives at CLCT said demand in the sports trading card market was ‘subdue’ for the quarter.
Taking a look at the balance sheet, the company has a large 21+ Million dollar cash bankroll, and less than $10 million in current liabilities. The large cash balance might have to do with the large dividend, which is paid quarterly at $0.325 per share. For those of you not familiar with how dividends work, the company basically pays you $0.325 per share, each quarter (every 3 months). So for example, today CLCT closed at $15.57 per share – if I owned 10 shares (10 x $15.57 = $155.70) Collectors universe would send me $3.25 (or 10 x $0.325) every 3 months. Most investors re-invest dividends, so in this example I would buy $3.25 worth of stock instead of taking it in cash – which would be good for about 1/3 of a share each quarter.
The company also has roughly $3.7 million allocated to a Share Buy-Back, which is basically the company reducing the number outstanding shares. However, the company has not purchased shares since 2008 – which was when shares were under $5. The dividend, and continued growth in the gold/silver coin grading should help continue to raise the stock price over time. If the company decides to execute the remaining buy-back monies, it should also mean good things for investors in the future.