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Once when I was younger I was fishing on Picture Lake in Pocasset. As I was concentrating on catching my next prize, some kid came walking up behind me:
· “Whose boat?”
· “I don’t know.”
· “Whose boat?”
· “I don’t know.”
· “Can I take a ride in it?”
Some things go beyond explanation. The other thing I didn’t understand was why people would want to buy a boat in the first place. I don’t own a boat, but I have heard the two best days of a boat owner’s life is the day he buys his boat followed by the day he sells it. But while you own it, this could be you:
Having said all that, today I bought stock in MPX (Marine Products Corporation) at 13.73. I will sell it in 4 to 6 weeks at 15.86. Here’s why I like MPX:
First of all, you have to admire this remarkable chart:
Look at that 200 day moving average…it looks like the bunny slope at Killington which I just fell down on today. This stock is up 130% in the last 12 months and it pays a nice 1.7% dividend. That’s a lot better than you’ll do in your savings account.
Marine Products Corporation designs, manufactures, and sells recreational fiberglass powerboats for the sportboat, deckboat, cruiser, sport yacht, jet boat, and sport fishing markets worldwide. It provides Chaparral sterndrive pleasure boats, including SSi and SSX sportboats, Sunesta sportdecks, Signature cruisers, SunCoast sportdeck outboards, Vortex Jet Boats, and Robalo outboard sport fishing boats, as well as H2O Sport, and Fish and Ski boats. The company sells its products to a network of 147 domestic and 85 international independent authorized dealers. Marine Products Corporation was founded in 1965 and is based in Atlanta, Georgia.
Marine Products Corporation is one of the largest manufacturer of stern drive powerboats in the United States and holds a 14.4% market share. Marine Products Corporation has been manufacturing high-quality powerboats for over 50 years. The boating market is a mature market with $35.4 billion in annual retail sales. Even with this industry size, the majority of recreational boat manufacturers are small companies with limited geographic markets. MPX beats them because it has national scale and reach. Chaparral is the largest manufacturer of sterndrive boats in the 18’ to 33’ range. With premium brands and a solid capital structure, Marine Products Corporation is prepared to capitalize on opportunities to increase its market share and to generate superior financial performance to build long-term shareholder value.
Interest rates are still low and if you can’t afford a boat, who cares? You can finance it. Don’t worry, those manufacturing jobs are coming back (well at least people believe that they are). So even if you don’t have a job, you can still have a boat. Retail sales are improving following the 2008 – 2009 downturn. Improved consumer confidence, real estate and lower fuel prices are macro catalysts. The market for recreational boats is growing at a healthy 7–10% rate, supported by increasing disposable income and retirements.
The MPX 16-foot Robalo is a new product offering for the first-time boater as well as more experienced anglers. The Robalo R160 offers the same features and quality found in their larger Robalo models, but at a nationally advertised price of under $20,000. Remember, even if your salary is $20,000 a year, you can own a boat. Finance it!
Speaking of finance, MPX has some rocking financials:
For the quarter ended September 30, 2016, Marine Products generated net sales of $55,361,000, a 17.7 percent increase, compared to $47,038,000 in the same period of the prior year. The increase in net sales was due primarily to a 12.5 percent increase in unit sales and a 1.7 percent increase in the average selling price per boat. Net income for the quarter ended September 30, 2016 was $4,284,000, an increase of $1,181,000 or 38.1 percent, compared to net income of $3,103,000 for the third quarter of 2015. Diluted earnings per share were $0.11 in the third quarter of 2016, an increase of $0.03 per share compared to the third quarter of the prior year.
Net sales for the nine months ended September 30, 2016 were $184,092,000, an increase of 17.1 percent compared to the first nine months of 2015. Net income for the nine-month period was $13,023,000 or $0.34 diluted earnings per share, compared to net income of $10,461,000, or $0.28 diluted earnings per share in the prior year.
It’s obvious from these numbers that people are feeling better about what’s going on around them. America doesn’t have to get great again. It’s already great. Everyone who wants a boat can buy one. Residential real estate, especially in several important recreational boating areas, has stabilized. Consumer confidence and residential real estate continue to improve, and the financing environment for both dealers and consumers remains stable. Consumers continue to go boating in large numbers, and the company has always believed in the longterm future of their business.
If you dig deeper into the management performance of this company, you see some good things. Even though the PE today is a little inflated at 31, based on the projected earnings growth the forward PE is projected to come into line at 22. For fiscal year 2017, ANAL-ysts estimate that MPX's earnings per share will grow by 26% to $0.63. That’s why it’s such a good deal now.
Management Effectiveness is illuminated by its Return on Assets of 12% and Return on Equity of 18%. These are all really good, but what really floats my boat when I analyze this company is its incredibly squeaky clean balance sheet. That’s right – it has zero long term debt. Zero. Nada. Zilch.
You know what happens when a company has positive growing earnings, solid market share and zero debt? You get pirates circling this boating company like salivating sharks. That’s right – it’s takeover bait. Why?
When a company has a clean balance sheet, the corporate raider can leverage up and buy the company and use the acquired company’s squeaky clean balance sheet to lower its own debt to equity ratio after the takeover . It’s financial alchemy. A signature move by private equity investors is to use only some of their own equity in a takeover and finance the remainder of the deal with debt. As long as the company being acquired is generating cash flow, it can service, or pay, that debt, which means that the private equity firm does not need to reach into its own pockets for the entire deal. When it comes time to sell the company, the private equity's profits are that much greater. Companies that are generating ongoing cash flow make attractive takeover candidates for private equity firms as a result. But you don’t get this good fortune for nothing. Any takeover play on MPX would mean that the stock price would go up up up up. It would go up well past my target price. Yes, debt capacity can be a wonderful thing.
Here’s what the boating boss had to say. Even though his name is Hubbell, he did not invent the Hubbell telescope. But he’s still a smart guy:
Richard A. Hubbell, Marine Products' President and Chief Executive Officer stated, "Our third quarter financial results reflect a strong retail selling season and the continued popularity of our product offerings. The trends of the last several quarters continued with strong sales of our Robalo outboard sport fishing boats, particularly the Robalo 180 and 246 models, as well as our SunCoast outboards and Vortex Jet Boats. Within our Chaparral sterndrive offerings, several of our SSX models also sold well compared to the prior year.
"We held our annual dealer conference during the third quarter, and observed that our dealers continue to be enthusiastic about the recreational boating market as well as our 2017 models. We are particularly enthusiastic regarding the Chaparral Surf Series, which we will soon be introducing to our dealers and customers. At the end of the third quarter, our order backlog was significantly higher than at the end of the third quarter of 2015, and field inventories were higher than the prior year but lower than at the end of the second quarter. We have increased production at the beginning of the fourth quarter in response to these indications of demand and in preparation for the 2017 winter boat show season," concluded Hubbell.
So with the money I make on this MPX trade, I can go out and buy a boat and go fishing. I’ll probably only catch perch.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
· “Whose boat?”
· “I don’t know.”
· “Whose boat?”
· “I don’t know.”
· “Can I take a ride in it?”
Some things go beyond explanation. The other thing I didn’t understand was why people would want to buy a boat in the first place. I don’t own a boat, but I have heard the two best days of a boat owner’s life is the day he buys his boat followed by the day he sells it. But while you own it, this could be you:
Having said all that, today I bought stock in MPX (Marine Products Corporation) at 13.73. I will sell it in 4 to 6 weeks at 15.86. Here’s why I like MPX:
First of all, you have to admire this remarkable chart:
Look at that 200 day moving average…it looks like the bunny slope at Killington which I just fell down on today. This stock is up 130% in the last 12 months and it pays a nice 1.7% dividend. That’s a lot better than you’ll do in your savings account.
Marine Products Corporation designs, manufactures, and sells recreational fiberglass powerboats for the sportboat, deckboat, cruiser, sport yacht, jet boat, and sport fishing markets worldwide. It provides Chaparral sterndrive pleasure boats, including SSi and SSX sportboats, Sunesta sportdecks, Signature cruisers, SunCoast sportdeck outboards, Vortex Jet Boats, and Robalo outboard sport fishing boats, as well as H2O Sport, and Fish and Ski boats. The company sells its products to a network of 147 domestic and 85 international independent authorized dealers. Marine Products Corporation was founded in 1965 and is based in Atlanta, Georgia.
Marine Products Corporation is one of the largest manufacturer of stern drive powerboats in the United States and holds a 14.4% market share. Marine Products Corporation has been manufacturing high-quality powerboats for over 50 years. The boating market is a mature market with $35.4 billion in annual retail sales. Even with this industry size, the majority of recreational boat manufacturers are small companies with limited geographic markets. MPX beats them because it has national scale and reach. Chaparral is the largest manufacturer of sterndrive boats in the 18’ to 33’ range. With premium brands and a solid capital structure, Marine Products Corporation is prepared to capitalize on opportunities to increase its market share and to generate superior financial performance to build long-term shareholder value.
Interest rates are still low and if you can’t afford a boat, who cares? You can finance it. Don’t worry, those manufacturing jobs are coming back (well at least people believe that they are). So even if you don’t have a job, you can still have a boat. Retail sales are improving following the 2008 – 2009 downturn. Improved consumer confidence, real estate and lower fuel prices are macro catalysts. The market for recreational boats is growing at a healthy 7–10% rate, supported by increasing disposable income and retirements.
The MPX 16-foot Robalo is a new product offering for the first-time boater as well as more experienced anglers. The Robalo R160 offers the same features and quality found in their larger Robalo models, but at a nationally advertised price of under $20,000. Remember, even if your salary is $20,000 a year, you can own a boat. Finance it!
Speaking of finance, MPX has some rocking financials:
For the quarter ended September 30, 2016, Marine Products generated net sales of $55,361,000, a 17.7 percent increase, compared to $47,038,000 in the same period of the prior year. The increase in net sales was due primarily to a 12.5 percent increase in unit sales and a 1.7 percent increase in the average selling price per boat. Net income for the quarter ended September 30, 2016 was $4,284,000, an increase of $1,181,000 or 38.1 percent, compared to net income of $3,103,000 for the third quarter of 2015. Diluted earnings per share were $0.11 in the third quarter of 2016, an increase of $0.03 per share compared to the third quarter of the prior year.
Net sales for the nine months ended September 30, 2016 were $184,092,000, an increase of 17.1 percent compared to the first nine months of 2015. Net income for the nine-month period was $13,023,000 or $0.34 diluted earnings per share, compared to net income of $10,461,000, or $0.28 diluted earnings per share in the prior year.
It’s obvious from these numbers that people are feeling better about what’s going on around them. America doesn’t have to get great again. It’s already great. Everyone who wants a boat can buy one. Residential real estate, especially in several important recreational boating areas, has stabilized. Consumer confidence and residential real estate continue to improve, and the financing environment for both dealers and consumers remains stable. Consumers continue to go boating in large numbers, and the company has always believed in the longterm future of their business.
If you dig deeper into the management performance of this company, you see some good things. Even though the PE today is a little inflated at 31, based on the projected earnings growth the forward PE is projected to come into line at 22. For fiscal year 2017, ANAL-ysts estimate that MPX's earnings per share will grow by 26% to $0.63. That’s why it’s such a good deal now.
Management Effectiveness is illuminated by its Return on Assets of 12% and Return on Equity of 18%. These are all really good, but what really floats my boat when I analyze this company is its incredibly squeaky clean balance sheet. That’s right – it has zero long term debt. Zero. Nada. Zilch.
You know what happens when a company has positive growing earnings, solid market share and zero debt? You get pirates circling this boating company like salivating sharks. That’s right – it’s takeover bait. Why?
When a company has a clean balance sheet, the corporate raider can leverage up and buy the company and use the acquired company’s squeaky clean balance sheet to lower its own debt to equity ratio after the takeover . It’s financial alchemy. A signature move by private equity investors is to use only some of their own equity in a takeover and finance the remainder of the deal with debt. As long as the company being acquired is generating cash flow, it can service, or pay, that debt, which means that the private equity firm does not need to reach into its own pockets for the entire deal. When it comes time to sell the company, the private equity's profits are that much greater. Companies that are generating ongoing cash flow make attractive takeover candidates for private equity firms as a result. But you don’t get this good fortune for nothing. Any takeover play on MPX would mean that the stock price would go up up up up. It would go up well past my target price. Yes, debt capacity can be a wonderful thing.
Here’s what the boating boss had to say. Even though his name is Hubbell, he did not invent the Hubbell telescope. But he’s still a smart guy:
Richard A. Hubbell, Marine Products' President and Chief Executive Officer stated, "Our third quarter financial results reflect a strong retail selling season and the continued popularity of our product offerings. The trends of the last several quarters continued with strong sales of our Robalo outboard sport fishing boats, particularly the Robalo 180 and 246 models, as well as our SunCoast outboards and Vortex Jet Boats. Within our Chaparral sterndrive offerings, several of our SSX models also sold well compared to the prior year.
"We held our annual dealer conference during the third quarter, and observed that our dealers continue to be enthusiastic about the recreational boating market as well as our 2017 models. We are particularly enthusiastic regarding the Chaparral Surf Series, which we will soon be introducing to our dealers and customers. At the end of the third quarter, our order backlog was significantly higher than at the end of the third quarter of 2015, and field inventories were higher than the prior year but lower than at the end of the second quarter. We have increased production at the beginning of the fourth quarter in response to these indications of demand and in preparation for the 2017 winter boat show season," concluded Hubbell.
So with the money I make on this MPX trade, I can go out and buy a boat and go fishing. I’ll probably only catch perch.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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