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When the Earth was formed, two Titans were created, Alpha and Omega. Now Omega has a little brother – not quite a Titan. Everybody called him Pat. When he got in trouble, his professors used to call him Patrick, however he never responded to that admonishment, because his real name is Pasquale. One of these people is Pasquale…but I won’t tell you who it is. What I will tell you is that there is no one named Patrick in this picture.
Now when I lived in St. Croix, I did have a good friend named Patrick. We would drink rum and cokes at lunch and see who could say louder – “THAT MAN SHOULD BE FIRED!”. Everyone thinks Patrick is an Irish name, but the Patrick who I knew in St. Croix is Mexican. Now he is an actor – and a very good one at that.
Today I bought stock in Patrick Industries (PATK) at 63.56. I will sell it in 4 to 6 weeks at 73.27. Here’s why I like PATK:
Look at this amazing chart. In the last year, the overall market has been flat but PATK’s stock price has doubled in less than 6 months but its PE is only 22:
Patrick Industries, Inc. manufactures and distributes building products and materials for the recreational vehicle, manufactured housing, and industrial markets in the United States and Canada. Its Manufacturing segment manufactures and fabricates decorative vinyl and paper laminated panels; fabricated aluminum products; wrapped vinyl, paper, and hardwood profile moldings; solid surface, granite, and quartz countertops; cabinet doors and components; hardwood furniture; fiberglass bath and shower surrounds and fixtures; fiberglass marine helms; fiberglass and plastic component products; slide-out trim and fascia; interior passage doors; RV paintings; softwoods lumber; simulated wood and stone products; slotwall panels and components; and others. It also offers custom fabrication, edge-banding, drilling, boring, and cut-to-size services. The company’s distribution segment distributes pre-finished wall and ceiling panels, drywall and drywall finishing products, electronics, wiring products, electrical and plumbing products, cement siding products, fiber reinforced polyester products, interior passage doors, roofing products, laminate and ceramic flooring products, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and others. Patrick Industries, Inc. offers its products through a network of manufacturing and distribution centers. The company was founded in 1959 and is based in Elkhart, Indiana.
The name of the company is Patrick. But it really should be named Pac-Man. All they have been doing is gobbling up other companies – and gobbling up their earnings. PATK acquired 26 companies from 2010 – 2016. This company now has 24 brands. Talk about diversification! PATK wants to give the acquired business and management team autonomy and allow their ingenuity to continue to prosper while providing their scale to support their operational support needs. They are a smorgasbord of opportunity hugging the economic growth which lies ahead.
I love their business values. Below is their motto:
Customer 1st is part of our culture, the way we approach our business and relationships every day. Our Customer 1st model below depicts how we focus on the customer (both internally and externally) every day.
Our customer will remain the focal point and a key driver of our culture and how we conduct ourselves to achieve results every day. Each team member has the ability and the accountability to embrace and execute our Customer 1st culture; the way we do business with our customers and each other.
Their mission statement is even better:
To manufacture and distribute quality products that exceed our customer’s expectations and to provide continued opportunities for our team members who excel in their position. The way we are successful at accomplishing our mission is to develop and foster relationships both internally and externally which are built on trust and proven performance.
And here is their Vision:
Patrick Industries is structured with independent business units, which allow our leaders and sales team to have the entrepreneurial spirit of a small company. This enables our teams to specialize in the products they manufacture and distribute, all with the underlying culture of putting our customer first.
By the way, their headquarters in Elkhart, Indiana – the “RV Capital of the World”. Now I could tell you about my spring break trips to Ft. Lauderdale when I was in college, but you wouldn’t believe the stuff I tell you. So never mind.
Now this would of course all be BS if the company wasn’t making any money. But for the last 3 years, on the back of these acquisitions, sales and earnings are growing remarkably. Sales have tripled in 4 years. Earnings have grown from $0.56/share in 2011 to $2.72 in 2015. They made $0.80/share last quarter and this quarter’s earnings (to be announced later this month) are sure to be gargantuan.
PATK is the leading national manufacturer and supplier of building and component products to the RV, MH and Industrial markets. They operates over 60 facilities in 14 states and have approximately 4,000+ employees. This ain’t no garage shop. Through efficiencies, they’ve grown their operating margins from 11% in 2011 to 17% now.
The big question mark, which is now being answered, comes from the fact that 78% of PATK’s revenues come from the RV market. RV shipments still haven't rebounded to 2006 levels – there is room to grow! While past major cycle downturns were surrounded by major economic and global events, trended shipment levels indicate that there continues to be potential for future growth based on the depth of the last cycle, current demographic indicators, and overall economic conditions.
Worried about RV’s?
• 2015 wraps up 6th consecutive year of wholesale unit shipment growth with 2016 projected to have growth of 6%; Q1 2016 wholesale unit shipments grew 11.5%
• New innovative designs and products appealing to all age groups and attracting younger buyers
•Smaller units with lower price points reaching broader economic class of people
What about the economy? No problems here:
• Consumer confidence 97.9 avg. for 2015 compared to 86.8 avg. for 2014
• 2016 April YTD average unemployment rate at ~5.0%
• Continued low fuel prices
Whatever could possibly be installed in an RV, Patrick most likely does it. With regard to the rest of their business, approximately 48% of their industrial revenue base is directly tied to the residential housing market which appears to have begun its recovery. Their products have applicability in both new construction and remodel markets.
PATK loves their business so much, they are buying back their own stock. Repurchased 1.8 million shares since February 2013 through January 2016 at an average cost per share of $25.04 --- total cost $46 million. Their new stock repurchase program announced in Q1 2016 for $50 million over 24 months. This should definitely boost share price as it occurs. Patrick had approximately 15.3 million shares outstanding and a market capitalization of approximately $818 million as of May 31, 2016.
Their balance sheet has adequate capacity to fuel future acquisitions – which will turn into more sales, more earnings and stock price ascension.
Every great company needs a great boss. Since Todd Cleveland’s appointment to CEO in 2009, PATK has outperformed every other stock in North America. Shares have risen 16,000%. Cleveland made some bold moves in 2009 to get the company set up to grow. That’s no jive.
Here’s what the Mr. Cleveland had to say:
“The first quarter of 2016 marked a continuation of improved overall performance for the Company with increased revenues, improved profitability, and cash flows. On the top-line, our revenues increased 25% over the prior year, and on the bottom line we posted a 36% increase in our net income for diluted share compared to 2015. The industries we serve as well reflected strong year-over-year improvement with RV wholesale shipments up 11% in the first quarter over the prior year in anticipation of an increasing retail demand as we head into the height of the selling season. MA shipments for the quarter increased by an estimated 18% compared to 2015, and new residential housing starts for the quarter were up 14% year-over-year. The strong start to the year was in alignment with our internal expectations and points to a positive outlook for fiscal 2016.”
So, I'm getting in my RV and rolling it to the bank because I am going to need that much room for all of the money I make with this stock pick.
I am HUGE!!
$$$MR. MARKET$$$
Now when I lived in St. Croix, I did have a good friend named Patrick. We would drink rum and cokes at lunch and see who could say louder – “THAT MAN SHOULD BE FIRED!”. Everyone thinks Patrick is an Irish name, but the Patrick who I knew in St. Croix is Mexican. Now he is an actor – and a very good one at that.
Today I bought stock in Patrick Industries (PATK) at 63.56. I will sell it in 4 to 6 weeks at 73.27. Here’s why I like PATK:
Look at this amazing chart. In the last year, the overall market has been flat but PATK’s stock price has doubled in less than 6 months but its PE is only 22:
Patrick Industries, Inc. manufactures and distributes building products and materials for the recreational vehicle, manufactured housing, and industrial markets in the United States and Canada. Its Manufacturing segment manufactures and fabricates decorative vinyl and paper laminated panels; fabricated aluminum products; wrapped vinyl, paper, and hardwood profile moldings; solid surface, granite, and quartz countertops; cabinet doors and components; hardwood furniture; fiberglass bath and shower surrounds and fixtures; fiberglass marine helms; fiberglass and plastic component products; slide-out trim and fascia; interior passage doors; RV paintings; softwoods lumber; simulated wood and stone products; slotwall panels and components; and others. It also offers custom fabrication, edge-banding, drilling, boring, and cut-to-size services. The company’s distribution segment distributes pre-finished wall and ceiling panels, drywall and drywall finishing products, electronics, wiring products, electrical and plumbing products, cement siding products, fiber reinforced polyester products, interior passage doors, roofing products, laminate and ceramic flooring products, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and others. Patrick Industries, Inc. offers its products through a network of manufacturing and distribution centers. The company was founded in 1959 and is based in Elkhart, Indiana.
The name of the company is Patrick. But it really should be named Pac-Man. All they have been doing is gobbling up other companies – and gobbling up their earnings. PATK acquired 26 companies from 2010 – 2016. This company now has 24 brands. Talk about diversification! PATK wants to give the acquired business and management team autonomy and allow their ingenuity to continue to prosper while providing their scale to support their operational support needs. They are a smorgasbord of opportunity hugging the economic growth which lies ahead.
I love their business values. Below is their motto:
Customer 1st is part of our culture, the way we approach our business and relationships every day. Our Customer 1st model below depicts how we focus on the customer (both internally and externally) every day.
Our customer will remain the focal point and a key driver of our culture and how we conduct ourselves to achieve results every day. Each team member has the ability and the accountability to embrace and execute our Customer 1st culture; the way we do business with our customers and each other.
Their mission statement is even better:
To manufacture and distribute quality products that exceed our customer’s expectations and to provide continued opportunities for our team members who excel in their position. The way we are successful at accomplishing our mission is to develop and foster relationships both internally and externally which are built on trust and proven performance.
And here is their Vision:
Patrick Industries is structured with independent business units, which allow our leaders and sales team to have the entrepreneurial spirit of a small company. This enables our teams to specialize in the products they manufacture and distribute, all with the underlying culture of putting our customer first.
By the way, their headquarters in Elkhart, Indiana – the “RV Capital of the World”. Now I could tell you about my spring break trips to Ft. Lauderdale when I was in college, but you wouldn’t believe the stuff I tell you. So never mind.
Now this would of course all be BS if the company wasn’t making any money. But for the last 3 years, on the back of these acquisitions, sales and earnings are growing remarkably. Sales have tripled in 4 years. Earnings have grown from $0.56/share in 2011 to $2.72 in 2015. They made $0.80/share last quarter and this quarter’s earnings (to be announced later this month) are sure to be gargantuan.
PATK is the leading national manufacturer and supplier of building and component products to the RV, MH and Industrial markets. They operates over 60 facilities in 14 states and have approximately 4,000+ employees. This ain’t no garage shop. Through efficiencies, they’ve grown their operating margins from 11% in 2011 to 17% now.
The big question mark, which is now being answered, comes from the fact that 78% of PATK’s revenues come from the RV market. RV shipments still haven't rebounded to 2006 levels – there is room to grow! While past major cycle downturns were surrounded by major economic and global events, trended shipment levels indicate that there continues to be potential for future growth based on the depth of the last cycle, current demographic indicators, and overall economic conditions.
Worried about RV’s?
• 2015 wraps up 6th consecutive year of wholesale unit shipment growth with 2016 projected to have growth of 6%; Q1 2016 wholesale unit shipments grew 11.5%
• New innovative designs and products appealing to all age groups and attracting younger buyers
•Smaller units with lower price points reaching broader economic class of people
What about the economy? No problems here:
• Consumer confidence 97.9 avg. for 2015 compared to 86.8 avg. for 2014
• 2016 April YTD average unemployment rate at ~5.0%
• Continued low fuel prices
Whatever could possibly be installed in an RV, Patrick most likely does it. With regard to the rest of their business, approximately 48% of their industrial revenue base is directly tied to the residential housing market which appears to have begun its recovery. Their products have applicability in both new construction and remodel markets.
PATK loves their business so much, they are buying back their own stock. Repurchased 1.8 million shares since February 2013 through January 2016 at an average cost per share of $25.04 --- total cost $46 million. Their new stock repurchase program announced in Q1 2016 for $50 million over 24 months. This should definitely boost share price as it occurs. Patrick had approximately 15.3 million shares outstanding and a market capitalization of approximately $818 million as of May 31, 2016.
Their balance sheet has adequate capacity to fuel future acquisitions – which will turn into more sales, more earnings and stock price ascension.
Every great company needs a great boss. Since Todd Cleveland’s appointment to CEO in 2009, PATK has outperformed every other stock in North America. Shares have risen 16,000%. Cleveland made some bold moves in 2009 to get the company set up to grow. That’s no jive.
Here’s what the Mr. Cleveland had to say:
“The first quarter of 2016 marked a continuation of improved overall performance for the Company with increased revenues, improved profitability, and cash flows. On the top-line, our revenues increased 25% over the prior year, and on the bottom line we posted a 36% increase in our net income for diluted share compared to 2015. The industries we serve as well reflected strong year-over-year improvement with RV wholesale shipments up 11% in the first quarter over the prior year in anticipation of an increasing retail demand as we head into the height of the selling season. MA shipments for the quarter increased by an estimated 18% compared to 2015, and new residential housing starts for the quarter were up 14% year-over-year. The strong start to the year was in alignment with our internal expectations and points to a positive outlook for fiscal 2016.”
So, I'm getting in my RV and rolling it to the bank because I am going to need that much room for all of the money I make with this stock pick.
I am HUGE!!
$$$MR. MARKET$$$
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