COMPANY DESCRIPTION

StoneMor Partners is a provider of funeral and cemetery products and services in the death care industry. Co.'s cemetery products and services include: interment rights, which consist of burial lots, lawn crypts, mausoleum crypts, cremation niches, and perpetual care rights; merchandise, which consists of burial vaults, caskets, grave markers and grave marker bases, and memorials; and services, which consist of installation of burial vaults, installation of caskets, installation of other cemetery merchandise, and other service items. As of Dec 31 2013, Co. operated 277 cemeteries in 27 states and Puerto Rico, and also owned and operated 90 funeral homes in 18 states and Puerto Rico. 

 

ECONOMIC MOAT

STON's economic moat is derived from its unique assets of funeral homes and cemetaries.  The scope and scale give direction and succession opportunities for a very fragmented industry.  Aging population trends make STON's value proposition and business model relevant for years to come.

 

OUTLOOK

StoneMor Partners concluded 2014 with record revenue results. Momentum continues to head in the right direction for the cemetery operator. The company seems poised to build on its already expanding funeral home business. he new insurance division provides great upside. Management intends to continue growing its quarterly distribution. After raising the lofty payout twice last year, StoneMor plans to pay an equal amount of attention to the advance of its dividend in 2015.  STON is still a few years away from being able to report annual profits. That said, an effort to expand into the insurance market is a solid opportunity for STON, and could increase long-term growth potential

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STRENGTHS

  • Locations of funeral homes and cemetaries is a competitive advantage.  Most municipalities are not jumping at the bit to open land for new cemetary usage.

WEAKNESSES

  • Acheiving and sustaining profitability. Even with solid revenue growth STON still operates at a loss.

THREATS

  • Mistakes in execution

  • Poor acquisitions

  • Missteps in implementing insurance division

OPPORTUNITIES

  • Aging American population

  • Prearranged funerals take burden off families

  • Insurance offerings fit well into the need set of this target market.  Great potential for sales success.

  • Strategic acquisitions to continue to consolidate a very fragmented industry.

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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