2 More Defensive Small Caps

Company Overview - Oil-Dri Corporation (ODC) is a leader in developing, manufacturing, and marketing sorbent products, with cat litter being a major product line that has historically shown recession resistance [3] - Steel Partners Holdings L.P. (SPLP) is a diversified global holding company with four main verticals: Industrial (49.9% of sales), Financial (18.4%), Energy (10.5%), and Supply Chain (10%) [9] Financial Performance - ODC's fluid purifications segment grew 17% year-over-year (YOY) to $26.5 million, now comprising nearly 23% of total revenue, benefiting from the growth of renewable diesel in the US [4] - ODC reported an EBITDA growth of 16% YOY for the quarter, with annual dividend growth of 4.9% over the past 10 years [5] - SPLP's Q4 Industrial revenue grew 8% YOY, while Supply Chain and Financial Services grew 9.1% and 2.9% YOY respectively; total revenue for the quarter grew 6.6% YOY [16] Market Position and Valuation - ODC is currently trading at 7.61X trailing 12-month EV/EBITDA, lower than the Zacks sub-industry average of 8.19X, sector average of 10.46X, and S&P 500 index of 14.66X [6] - SPLP is trading at 1.20X trailing 12-month EV/EBITDA, significantly lower than the Zacks sub-industry and sector averages of 10.02X and S&P 500 index of 14.66X [17] - ODC shares have increased by 27.1% in the past six months and 22% over the trailing 12-month period, while SPLP shares are up 7.1% in the past six months and 9.7% over the trailing 12-month period [8][19] Strategic Insights - ODC's acquisition of Ultra Pet in May 2024 is expected to contribute to incremental YOY sales for at least the next quarter [3] - SPLP's diversified business model provides natural hedges against macro dynamics such as commodity pricing, interest rates, and global trade [14]