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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.)
Remember this episode of Gilligan’s Island? Powell Industries is a high-profile company and rival business to Howell Industries. Not much of its history or even its location is known, but the company eventually goes bankrupt and its residual funds seized by the U.S. Government, possibly for unpaid taxes, suggesting some sort of impropriety in its downfall. In news broadcasts of its downfall, the Radio Announcer confuses Powell
Industries with Howell Industries, sending Mr. Howell into a deep depression until the correction is made several broadcasts later.
What does this TV show from 60 years ago have to do with today? Actually not much, but it’s time to pick another stock winner and there is no better stock on the menu than the real Powell Industries (POWL). And no, we’re not talking about Fed Chairman Jerome Powell…we’re talking about an amazing company that has super growth potential!
Today I bought shares in POWL at 179.14. I will sell it in 4 – 6 weeks at 206.91.
Here’s why I like POWL.
The stock of POWL is up 113% in the last 12 months yet its PE is only 16.3. It sits in a real industry sweet spot making equipment that services power generation. With AI chips, their servers and electric vehicles tying into the grid, there’s going to be an incredible uptick of power demand. It has shown impressive growth with earnings surging by 253.6% over the past year. The company is debt-free and showing very strong financial health.
Powell Industries, Inc., together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems. The company's principal products include integrated power control room substations, custom-engineered modules, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches, and bus duct systems, as well as traditional and arc-resistant distribution switchgears and control gears. Its products have application in voltages ranging from 480 volts to 38,000 volts. The company also provide field service inspection, installation, commissioning, modification and repair, spare parts, retrofit and retrofill components for existing systems, and replacement circuit breakers for switchgear. It serves onshore and offshore production, liquefied natural gas facilities and terminals, pipelines, refineries, and petrochemical plants, as well as electric utility, light rail traction power, mining and metals, pulp and paper, data centers and other municipal, commercial, and industrial markets. The company has operations in the United States, Canada, the Middle East, Africa, Europe, Mexico, and Central and South America. Powell Industries, Inc. was founded in 1947 and is headquartered in Houston, Texas.
At the end of the day, it’s all about revenues and earnings and POWL paints a pretty picture. Check out the revenues:
2021 $470 million
2022 $532 million
2023 $699 million
TTM $945 million (trailing 12 months)
The earnings story is even better:
2021 $ 0.6 million
2022 $13.7 million
2023 $54.5 million
TTM $130.2 million (trailing 12 months)
You can see the trajectory related to the fundamental changes in the business. POWL's top line grew 50% YoY in Q3 2024up to $288.2 million. There is considerable backlog that already have propped up the forecast for the next few quarters. Their most recent earnings results reflect this:
The company has not been shy at all about reinvesting their capital into capacity expansion, which should fuel revenue growth for a long time to come. This would all be a concern if the company’s PE was much higher, but surprisingly the stock price has lagged relative to its established earnings growth. When you look at the landscape of their customer base and the need for its products, it’s almost silly that the stock price is so far behind the earnings that we know are coming. The growth is coming from the industrial end markets, oil and gas, and petrochemical and the fear of the recession that never came is fading fast. Even if the overall economy does slow down, the floor price on this stock is protected by its low PE, and it does pay a dividend also for those who don’t mind waiting more patiently if need be.
What can you say about performance…just look at the numbers. Return on assets is 12.4%. Return on Equity is a pornographic 34.2%. This isn’t a silicon valley high tech high flier with a fickle customer base…it’s a steady eddy company that serves rock solid highly capitalized industries that have consumer based customers. With a market cap of 2 billion, they ain’t playin. Powell also has a worldwide customer base, thus diversifying against any geographical dips. Powell has also reinvested in its innovation initiatives to develop new technologies that they can implement into their existing customer base. The fact that they have zero debt will enable them to tap into cheap capital whenever they want, possibly for acquisitions, particularly since their namesake Powell is finally cutting interest rates. I kind of like the fact that I was able to buy this company off of its high price as I think now that it is rebounding, it could climb pretty fast as the weak hands are gone.
What does their boss think of all this?
Brett A. Cope, Powell’s Chairman and Chief Executive Officer, stated, “Powell’s fiscal third quarter results reflect strong execution across Powell and further validates our strategy as well as our unique market position as an integrator of complex, engineered-to-order electrical solutions. Revenues in the quarter were 50% higher than the prior period, driven by strength across nearly all of the market sectors we serve. We booked $356 million of new orders in the quarter, which were spread broadly across our key end markets. Importantly, the most significant increase was driven by our Electric Utility sector, while we were also awarded a notable Petrochemical order in the quarter. Overall, I am very pleased to report solid operational performance in the quarter coupled with broad and robust customer activity across our markets.”
Now if $$$MR. MARKET$$$ was on Gilligan’s Island, he’d have Thurston Howell serving him dinner, but never mind all that. No matter what chairman Powell does to interest rates, Powell Industries is going to take $$$MR. MARKET$$$ once again to the pay window…..so let’s GOOOOOO!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Remember this episode of Gilligan’s Island? Powell Industries is a high-profile company and rival business to Howell Industries. Not much of its history or even its location is known, but the company eventually goes bankrupt and its residual funds seized by the U.S. Government, possibly for unpaid taxes, suggesting some sort of impropriety in its downfall. In news broadcasts of its downfall, the Radio Announcer confuses Powell
Industries with Howell Industries, sending Mr. Howell into a deep depression until the correction is made several broadcasts later.
What does this TV show from 60 years ago have to do with today? Actually not much, but it’s time to pick another stock winner and there is no better stock on the menu than the real Powell Industries (POWL). And no, we’re not talking about Fed Chairman Jerome Powell…we’re talking about an amazing company that has super growth potential!
Today I bought shares in POWL at 179.14. I will sell it in 4 – 6 weeks at 206.91.
Here’s why I like POWL.
The stock of POWL is up 113% in the last 12 months yet its PE is only 16.3. It sits in a real industry sweet spot making equipment that services power generation. With AI chips, their servers and electric vehicles tying into the grid, there’s going to be an incredible uptick of power demand. It has shown impressive growth with earnings surging by 253.6% over the past year. The company is debt-free and showing very strong financial health.
Powell Industries, Inc., together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems. The company's principal products include integrated power control room substations, custom-engineered modules, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches, and bus duct systems, as well as traditional and arc-resistant distribution switchgears and control gears. Its products have application in voltages ranging from 480 volts to 38,000 volts. The company also provide field service inspection, installation, commissioning, modification and repair, spare parts, retrofit and retrofill components for existing systems, and replacement circuit breakers for switchgear. It serves onshore and offshore production, liquefied natural gas facilities and terminals, pipelines, refineries, and petrochemical plants, as well as electric utility, light rail traction power, mining and metals, pulp and paper, data centers and other municipal, commercial, and industrial markets. The company has operations in the United States, Canada, the Middle East, Africa, Europe, Mexico, and Central and South America. Powell Industries, Inc. was founded in 1947 and is headquartered in Houston, Texas.
At the end of the day, it’s all about revenues and earnings and POWL paints a pretty picture. Check out the revenues:
2021 $470 million
2022 $532 million
2023 $699 million
TTM $945 million (trailing 12 months)
The earnings story is even better:
2021 $ 0.6 million
2022 $13.7 million
2023 $54.5 million
TTM $130.2 million (trailing 12 months)
You can see the trajectory related to the fundamental changes in the business. POWL's top line grew 50% YoY in Q3 2024up to $288.2 million. There is considerable backlog that already have propped up the forecast for the next few quarters. Their most recent earnings results reflect this:
- Gross profit nearly doubled compared to the same period in fiscal 2023, achieving a gross margin of 28.4%, the highest in over a decade.
- The company booked $356 million of new orders in the quarter, the highest quarterly total of fiscal 2024.
- Backlog remains at $1.3 billion, the highest in Powell's history, indicating strong future revenue potential.
- Net income more than doubled to $46.2 million or $3.79 per diluted share, compared to $18.5 million or $1.52 per share in the prior period.
The company has not been shy at all about reinvesting their capital into capacity expansion, which should fuel revenue growth for a long time to come. This would all be a concern if the company’s PE was much higher, but surprisingly the stock price has lagged relative to its established earnings growth. When you look at the landscape of their customer base and the need for its products, it’s almost silly that the stock price is so far behind the earnings that we know are coming. The growth is coming from the industrial end markets, oil and gas, and petrochemical and the fear of the recession that never came is fading fast. Even if the overall economy does slow down, the floor price on this stock is protected by its low PE, and it does pay a dividend also for those who don’t mind waiting more patiently if need be.
What can you say about performance…just look at the numbers. Return on assets is 12.4%. Return on Equity is a pornographic 34.2%. This isn’t a silicon valley high tech high flier with a fickle customer base…it’s a steady eddy company that serves rock solid highly capitalized industries that have consumer based customers. With a market cap of 2 billion, they ain’t playin. Powell also has a worldwide customer base, thus diversifying against any geographical dips. Powell has also reinvested in its innovation initiatives to develop new technologies that they can implement into their existing customer base. The fact that they have zero debt will enable them to tap into cheap capital whenever they want, possibly for acquisitions, particularly since their namesake Powell is finally cutting interest rates. I kind of like the fact that I was able to buy this company off of its high price as I think now that it is rebounding, it could climb pretty fast as the weak hands are gone.
What does their boss think of all this?
Brett A. Cope, Powell’s Chairman and Chief Executive Officer, stated, “Powell’s fiscal third quarter results reflect strong execution across Powell and further validates our strategy as well as our unique market position as an integrator of complex, engineered-to-order electrical solutions. Revenues in the quarter were 50% higher than the prior period, driven by strength across nearly all of the market sectors we serve. We booked $356 million of new orders in the quarter, which were spread broadly across our key end markets. Importantly, the most significant increase was driven by our Electric Utility sector, while we were also awarded a notable Petrochemical order in the quarter. Overall, I am very pleased to report solid operational performance in the quarter coupled with broad and robust customer activity across our markets.”
Now if $$$MR. MARKET$$$ was on Gilligan’s Island, he’d have Thurston Howell serving him dinner, but never mind all that. No matter what chairman Powell does to interest rates, Powell Industries is going to take $$$MR. MARKET$$$ once again to the pay window…..so let’s GOOOOOO!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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