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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
There are two trends these days that simply cannot be refuted. We are moving away from fossil fuels and towards electrification. The demand for electricity is increasing, and the world’s electric power systems are working hard to keep up. In the US alone, Princeton University estimates that by 2050 the electrical grid may need as much as two to three times the current electric transmission capacity. What that means is that we’ll be upgrading power grids all over the place. Electric vehicle (EV) use in the U.S. is estimated to grow from 3 million (2019) to over 26 million by 2030. To accommodate the sharp increase in demand for charging stations, contractors will need product solutions that are easily installed, durable, cost-effective, and future-proof.
The other trend is that broadband will continue to expand and improve. So what’s driving this growth? Certainly, the rollout of 5G technology in the communications sector has created an almost insatiable demand for fiber optic closures. Today, everything from cars to watches to even toasters exchange data through a complex system of communications known as the Internet of Things (IoT). And the backbone of all that connectivity is an ever-increasing network of devices and cables. The ever-increasing demand for more bandwidth and faster speeds, thanks to IoT, should see this demand continue for some time. Most of us see and are affected by this on a regular basis. However, there will also be significant emphasis placed on rural broadband, addressing currently underserved communities, further increasing demand for communications product lines.
Wouldn’t it be great if there was a company that catered to these two needs – electricity AND broadband? Well your wait is over.
Preformed Line Products Co. engages in the provision of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information, and other similar industries. The company offers optical ground wire products and splice transmission and distribution lines, connectors for substations, string hardware products, polymer insulators, wildlife protection, substation fittings, and motion control devices. Today I bought shares in Preformed Line Products Co. (PLPC) at $164.50. I will sell it in 4 to 6 weeks at 190.00. Here’s why I like PLPC:
Take a look at this wonderful chart:
This stock is up 136% in the last 12 months, but its PE is still only 13. Why is it’s PE so low? It’s because this company makes a lot of money! Why does it make a lot of money? Because its customer base is growing like crazy. Preformed Line Products Co.'s earnings have increased from $9.20 to an estimated $15.35 over the past 5 quarters, they have shown strong acceleration in quarterly growth rates. This indicates an improvement in future earnings growth should occur. This is a very conservative, family run company whose debt capacity is very robust, with a debt/equity ratio of only 22% while maintaining high cash liquidity. It has a market cap of $900 million but it’s sitting on more than $300 million of real estate. This company has a foundation of granite with a diversity of product offerings, which minimizes its systemic risk. Oh yeah, it also pays a dividend.
Last week PLPC reported sweet earnings:
The second quarter of 2023 net income continued to benefit from increased gross profit from incremental sales and selling price increases offsetting the impact of inflation on commodities and freight. Gross profit as
a percentage of net sales was 36.5% for the second quarter of 2023, an increase of 420 basis points versus the same quarter in 2022. The company has a Return on Assets of 11%, a Return on Equity of 19% and a Return on Capital Employed of 20%. A ROCE of 20% is really good, especially considering the industry average is only around 11%. So as the company deploys and reinvests more capital, its absolute earnings will continue to flourish at this 20% clip.
For the chartist tech heads, the fifty-day moving average currently stands at $165, while the two-hundred-day moving average registers at $118—an upward trend suggesting positive momentum during this period. There are zero ANAL-ysts covering this stock…that means they are zeroes for missing this one. Having said that, the minute one of these clowns jumps on the gravy train and starts pumping this stock, the stock price will certainly jump with a PE multiple expansion.
The company mission is "To design and develop products that are of consistently high quality, are technically superior, provide dependable service, and offer practical, safe, and innovative solutions for our customers' needs and to maintain standards of excellence consistent with the requirements of the industries we serve. To assure that in the design and manufacture of these products these standards are continually maintained through ongoing laboratory and field testing. To assure that products' quality and reliability are not sacrificed or compromised." The company is built on an entrepreneurial foundation of innovation, quality and service, they are uniquely positioned to meet the challenges of the next generation. How can you not like this?
The company has continued to expand internationally with full ownership of manufacturers in England, joint ventures in Spain and Japan and subsidiaries in Brazil and Mexico, fully supported by a strong research and development team. Built at the headquarters location, the R&D facility opened in 1979 and continues to be one of the most sophisticated in the country. Engineers and technicians test everything from tension load to the impact of wind speed and humidity on product performance and durability.
PLPC is also on the renewables train. DPW Solar, located in Albuquerque, New Mexico was acquired in 2007. DPW Solar specializes in engineering, designing and installing turnkey photovoltaic systems for residential, commercial and industrial applications. It is also a major manufacturer of photovoltaic racks and equipment and battery enclosures. PLP's innovative solar and electric vehicle charger mounting solutions are designed with strength, longevity, and ease of installation in mind. Rigorous testing standards ensure these critical infrastructure products are built to last in the world's harshest environments. That's why professional integrators and installers continually rely on PLP as the preferred solar and EV infrastructure provider for stadiums, airports, retail stores, schools, universities, and commercial buildings worldwide.
Turning to the internet, PLP is a leading supplier of fiber connectivity and ADSS hardware solutions to customers around the world. They have developed dozens of new products in fiber optic connectivity and hardware over the past few years.
Remember, this company has been in business for 75 years. The average lifespan of businesses in the US has declined from 90 years in the mid-1930s to just over 55 years in the mid-1950s to less than 20 years today. PLPC has a secret success recipe that has been handed down over the years. They now have over 25 locations and 3,500+ employees spread across six continents. The Company’s goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacture and marketing of technically advanced products and services primarily related to the energy and communications markets.
Just ask the boss:
Rob Ruhlman, Chairman and Chief Executive Officer, said, "We continue to generate strong net sales performance, matching the quarterly net sales record set earlier this year. We also generated strong net income and earnings per share, falling just short of our previous record earnings in Q1 2023. The strong quarterly results were made possible by the PLP-USA, EMEA, and Asia-Pacific regions posting improved net sales and pre-tax earnings versus Q2 2022 while the Americas fell just short of besting their Q2 2022 results. During the first two quarters of 2023, net sales have outpaced orders resulting in a 29% decrease to backlog from the beginning of the year and an improvement in production lead times, which is a positive for PLP and its customers. We will continue to focus on the delivery of high-quality products and timely service that our customers have come to expect from our dedicated workforce."
This stock is easy money. It will have unfettered revenue growth based on the demand growth in the markets it serves. Combine this with the incredible PE value and you just CAN’T LOSE! I’ll be taking this ticket to the cash window in no time.
I am HUGE!
$$$MR. MARKET$$$
There are two trends these days that simply cannot be refuted. We are moving away from fossil fuels and towards electrification. The demand for electricity is increasing, and the world’s electric power systems are working hard to keep up. In the US alone, Princeton University estimates that by 2050 the electrical grid may need as much as two to three times the current electric transmission capacity. What that means is that we’ll be upgrading power grids all over the place. Electric vehicle (EV) use in the U.S. is estimated to grow from 3 million (2019) to over 26 million by 2030. To accommodate the sharp increase in demand for charging stations, contractors will need product solutions that are easily installed, durable, cost-effective, and future-proof.
The other trend is that broadband will continue to expand and improve. So what’s driving this growth? Certainly, the rollout of 5G technology in the communications sector has created an almost insatiable demand for fiber optic closures. Today, everything from cars to watches to even toasters exchange data through a complex system of communications known as the Internet of Things (IoT). And the backbone of all that connectivity is an ever-increasing network of devices and cables. The ever-increasing demand for more bandwidth and faster speeds, thanks to IoT, should see this demand continue for some time. Most of us see and are affected by this on a regular basis. However, there will also be significant emphasis placed on rural broadband, addressing currently underserved communities, further increasing demand for communications product lines.
Wouldn’t it be great if there was a company that catered to these two needs – electricity AND broadband? Well your wait is over.
Preformed Line Products Co. engages in the provision of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information, and other similar industries. The company offers optical ground wire products and splice transmission and distribution lines, connectors for substations, string hardware products, polymer insulators, wildlife protection, substation fittings, and motion control devices. Today I bought shares in Preformed Line Products Co. (PLPC) at $164.50. I will sell it in 4 to 6 weeks at 190.00. Here’s why I like PLPC:
Take a look at this wonderful chart:
This stock is up 136% in the last 12 months, but its PE is still only 13. Why is it’s PE so low? It’s because this company makes a lot of money! Why does it make a lot of money? Because its customer base is growing like crazy. Preformed Line Products Co.'s earnings have increased from $9.20 to an estimated $15.35 over the past 5 quarters, they have shown strong acceleration in quarterly growth rates. This indicates an improvement in future earnings growth should occur. This is a very conservative, family run company whose debt capacity is very robust, with a debt/equity ratio of only 22% while maintaining high cash liquidity. It has a market cap of $900 million but it’s sitting on more than $300 million of real estate. This company has a foundation of granite with a diversity of product offerings, which minimizes its systemic risk. Oh yeah, it also pays a dividend.
Last week PLPC reported sweet earnings:
- Net sales growth of 11% compared to Q2 2022, matching quarterly record net sales levels achieved in Q1 2023
- Gross profit margin of 36.5%, consistent with Q1 2023
- Diluted EPS of $4.08, an increase of 47% from Q2 2022
The second quarter of 2023 net income continued to benefit from increased gross profit from incremental sales and selling price increases offsetting the impact of inflation on commodities and freight. Gross profit as
a percentage of net sales was 36.5% for the second quarter of 2023, an increase of 420 basis points versus the same quarter in 2022. The company has a Return on Assets of 11%, a Return on Equity of 19% and a Return on Capital Employed of 20%. A ROCE of 20% is really good, especially considering the industry average is only around 11%. So as the company deploys and reinvests more capital, its absolute earnings will continue to flourish at this 20% clip.
For the chartist tech heads, the fifty-day moving average currently stands at $165, while the two-hundred-day moving average registers at $118—an upward trend suggesting positive momentum during this period. There are zero ANAL-ysts covering this stock…that means they are zeroes for missing this one. Having said that, the minute one of these clowns jumps on the gravy train and starts pumping this stock, the stock price will certainly jump with a PE multiple expansion.
The company mission is "To design and develop products that are of consistently high quality, are technically superior, provide dependable service, and offer practical, safe, and innovative solutions for our customers' needs and to maintain standards of excellence consistent with the requirements of the industries we serve. To assure that in the design and manufacture of these products these standards are continually maintained through ongoing laboratory and field testing. To assure that products' quality and reliability are not sacrificed or compromised." The company is built on an entrepreneurial foundation of innovation, quality and service, they are uniquely positioned to meet the challenges of the next generation. How can you not like this?
The company has continued to expand internationally with full ownership of manufacturers in England, joint ventures in Spain and Japan and subsidiaries in Brazil and Mexico, fully supported by a strong research and development team. Built at the headquarters location, the R&D facility opened in 1979 and continues to be one of the most sophisticated in the country. Engineers and technicians test everything from tension load to the impact of wind speed and humidity on product performance and durability.
PLPC is also on the renewables train. DPW Solar, located in Albuquerque, New Mexico was acquired in 2007. DPW Solar specializes in engineering, designing and installing turnkey photovoltaic systems for residential, commercial and industrial applications. It is also a major manufacturer of photovoltaic racks and equipment and battery enclosures. PLP's innovative solar and electric vehicle charger mounting solutions are designed with strength, longevity, and ease of installation in mind. Rigorous testing standards ensure these critical infrastructure products are built to last in the world's harshest environments. That's why professional integrators and installers continually rely on PLP as the preferred solar and EV infrastructure provider for stadiums, airports, retail stores, schools, universities, and commercial buildings worldwide.
Turning to the internet, PLP is a leading supplier of fiber connectivity and ADSS hardware solutions to customers around the world. They have developed dozens of new products in fiber optic connectivity and hardware over the past few years.
Remember, this company has been in business for 75 years. The average lifespan of businesses in the US has declined from 90 years in the mid-1930s to just over 55 years in the mid-1950s to less than 20 years today. PLPC has a secret success recipe that has been handed down over the years. They now have over 25 locations and 3,500+ employees spread across six continents. The Company’s goal is to continue to achieve profitable growth as a leader in the research, innovation, development, manufacture and marketing of technically advanced products and services primarily related to the energy and communications markets.
Just ask the boss:
Rob Ruhlman, Chairman and Chief Executive Officer, said, "We continue to generate strong net sales performance, matching the quarterly net sales record set earlier this year. We also generated strong net income and earnings per share, falling just short of our previous record earnings in Q1 2023. The strong quarterly results were made possible by the PLP-USA, EMEA, and Asia-Pacific regions posting improved net sales and pre-tax earnings versus Q2 2022 while the Americas fell just short of besting their Q2 2022 results. During the first two quarters of 2023, net sales have outpaced orders resulting in a 29% decrease to backlog from the beginning of the year and an improvement in production lead times, which is a positive for PLP and its customers. We will continue to focus on the delivery of high-quality products and timely service that our customers have come to expect from our dedicated workforce."
This stock is easy money. It will have unfettered revenue growth based on the demand growth in the markets it serves. Combine this with the incredible PE value and you just CAN’T LOSE! I’ll be taking this ticket to the cash window in no time.
I am HUGE!
$$$MR. MARKET$$$
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