There aren't always infinity positive return ideas to invest in. Sometimes there really aren't any. Garrett Motion is a company that manufactures turbochargers and sells them to the big three automakers. It's a decently steady and profitable business but it's slowly on the way out. EVs don't need turbochargers. They have a small R&D division looking into EV inverters, and they'll continue to make turbochargers for non-auto applications, but for the most point, they are a melting ice cube and their CEO tells you this in plain terms on earnings calls.
But their stock is priced like it too, so they are plowing most of their free cash flow into buying back shares, and it more than offsets the melt. The result? Their shares are steady and up about 95% over the past 5 years despite overall revenue decline across this period.
Sure, you could have this sleepy turbocharger factory start investing in real estate, or get into uranium mining, or begin trying to write and sell cloud computing software. But their strategy is to keep making a good product and regularly eat up stock to overcome declining earnings per share, and it's working rather nicely.
But their stock is priced like it too, so they are plowing most of their free cash flow into buying back shares, and it more than offsets the melt. The result? Their shares are steady and up about 95% over the past 5 years despite overall revenue decline across this period.
Sure, you could have this sleepy turbocharger factory start investing in real estate, or get into uranium mining, or begin trying to write and sell cloud computing software. But their strategy is to keep making a good product and regularly eat up stock to overcome declining earnings per share, and it's working rather nicely.