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Author: TMF42 Big red star, 1000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 6  
Subject: Re: Let's Go Dumpster Diving... Date: 2/25/2010 6:25 PM
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Three companies from the Dumpster Dive screen caught my eye. Here is a rundown on each. As one of the initial stages in my investment process, I try to get a handle on each company’s business and decipher whether or not it may have a competitive advantage. Here are my thoughts on each…

CBZ
CBIZ, Inc. helps small- and medium-sized businesses focus on their business by providing outsourced professional services, products and advice in three key areas: employee stuff, financial stuff, and tech stuff. For example, what does a real estate developer know or care to know about computer networking? Probably not much – but they know that they need a network in their home office, as well as a VPN that field associates can log on to in order to report delays, service requests or other valuable information. CBIZ steps in and takes care of such tasks with a smile. Now ask the same question about accounting. Or payroll. Or recruiting. The great thing about some of these business lines is that they are sticky – they lead to recurring revenue streams. Additionally, if CBIZ does a great job, it can help out its clients by taking on other tasks too (the joy of cross-selling). The Company’s strength appears to be in its personal touch (it is largely a regional operator) and its array of services (it tries to be a one stop shop). In order to assess the Company’s competitive advantage further I need to figure out how much of a pain it is for customers to switch providers. In essence, how deep is CBIZ able to dig in their claws by offering its array of services and is there any cost (money-, data-, or effort-wise) to switching to one of CBIZs competitors.

POWL
Powell Industries is a 60+ year old company that designs and manufactures custom equipment and control systems for the management of electrical energy and other critical processes. If that seems a little obscure, well, that’s because it is. Powell doesn’t have a catalog-o-stuff that it makes. Rather, it has over a half a century worth of experience dealing with electrical power distribution and control (think circuit breakers and transformers) which it pulls on to engineer, then build, products its clients demand. Powell makes both the components (hardware) and the systems and technology (software and hardware) to monitor the flow of stuff (electrical energy, water, waste, etc.). The Company serves the transportation, environmental, energy, industrial and utility industries. If you didn’t catch that, its business is cyclical. The Company’s competitive advantage, if it has one, will come from its extensive knowledge and experience (“know-how”) and scale. POWL is a large player in this game, has a large library of prior products and technologies to draw from, and is able to achieve some cost savings from not having to engineer from scratch for each new project.

SUSS
Brace yourself for this description! Susser Holdings is involved in three integrated lines of business: tacos, gas and Pepto-Bismol. Okay, maybe that was a little stretch, but not too much. Susser operates over 500 Stripes branded convenience stores throughout Texas, Oklahoma and New Mexico – a great place to pick up some Pepto. Within many of those c-stores (as they are called in the biz) are company owned restaurants, which operate under the Laredo Taco Company brand. Finally, Susser distributes wholesale motor fuel to gas stations in its geographic footprint. SUSS is currently in the process of rebranding its Town & Country c-stores, obtained through a recent acquisition, into its Stripes stores. If the Company’s locations are far more convenient than its competitors, it could have a competitive advantage.

My gut is telling me to press on with SUSS. I think wrapping my tiny brain around their business model will be a snap and I like the fact that it is owned by a third generation Susser. In the coming days I will take SUSS through the next step or two of my investment process. Let me know your thoughts!
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