They have massive leverage and the upside of using their know-how to become a dominant player in the ODE.
Two small oil service companies, Frank's International (FI) and Dril-Quip (DRQ), both will have tremendous leverage to the upside when the oil market turns.
Vulcan Materials consumes about 40 million gallons of diesel a year, so as diesel prices come down, there is earnings leverage to the upside.
When anyone has a great deal of leverage, this amplifies the upside return on equity — for a given return on assets, equity holders get more.
Sales of so-called "off plan," or unbuilt, properties, that only required a down payment and were flipped many times before a single brick was laid, have come to a virtual standstill, as buyers recognize that leverage works on the upside, but it works on the downside as well.
So the upside leverage there — if we can create a hit – the upside leverage is very, very strong there.
Leverage is great on the upside.
But if you get that model right, the upside leverage is huge.
Aside from neutral coincident indicators for factory production and retail sales, the bigger picture confirms that the upside leverage in corporate profit margins is spent.
And adding leverage and risk certainly increases the upside potential, while the new structures limit the downside.
There's debt here (borrowings are nearly equal to equity) but so far, the company has been enjoying the upside of leverage: rapidly growing profits.
