MSC Industrial Direct Co Inc (NYSE:MSM) $MSM

MSC Industrial Direct is an MRO (maintenance, repair, and overhaul) distributor focused on the metalworking industry.

MSC can trace its roots to Sidney Jacobson’s Sid Tool Company founded in 1941 in Manhattan. To diversify its sales, in 1961 Jacobson started a catalog business offering discounted prices on imported cutting tools. Since it was a catalog instead of a store, the book was able to offer a wide range of products. By 1964, it had over 150 pages. Today, MSC’s catalog – known as the “Big Book”--has over 4,000 pages, with customers in all 50 states, through a network of five customer fulfillment centers (four in the United States and one in the United Kingdom) and 106 branch offices (104 in the United States, one is located in the United Kingdom and one in Mexico).

Over the next 5 years, MSC can increase sales, increase margin, and pay out free cash flow without additional investment in infrastructure. It is cheap today compared to what MSC will be earning in 2021.

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