10-01-2014, 01:18 AM
(This post was last modified: 10-01-2014, 01:21 AM by Dividend Watcher.)
TopRamenTrader,
Superior Industries (SUP) is an intriguing idea. Looks like a lot of their sales go to the OEM market. Some of their stats didn't seem so bad, current ratio over 3, price/sales of 0.6, price/book a little over 1.0. Then I started scanning some of the other stats. PEG over 12, latest earnings a 20% decrease just as auto sales are starting to improve, profit margins/ROE/ROA all less than 5%, a market cap of only $468 million for a company as old as I am seems a little small for being in business for 50-some-odd years. Nothing wrong with small caps but if it's going to continually share its profits with shareholders by increasing dividends, it needs to keep growing. The clincher for me was the dividend. Go to longrundata.com, put their symbol in the dividend section and look at the graph. I bought a set of their after-market rims years ago and was satisfied with the quality once the dealer found 4 fairly matched rims for trueness and balance. That would give me pause. Finally, it's a one time buy for the average consumer and not many do.
Douglas Dynamics (PLOW) is a much more interesting idea although another small cap. I recognize the brand names since I see them around here often in the winter but they're only going to sell to less than half the country. Don't know if they also market in Canada but overseas sales are probably low to non-existent for a $400 million market cap company. Stats are more comforting with profit margin and operating margin in the double digits, current ratio around 3.6, ROA=9%, ROE=16% and quarterly earnings are up by a wide margin (triple digits). Then I got to the dividend. Payout ratio over 100% and a short & very erratic dividend stream. Don't know if FCF can cover the dividend since I didn't dig any further.
Both seem speculative to me with PLOW seeming to be the better choice but I'd look closer at Eric's suggestions.
GPC is a great company with a good long term record. You probably know them as NAPA or Echlin. NAPA stores are everywhere including many of the small towns around me in hickville. Monro, of course, does mufflers/catalytic converters and has numerous repair shops across the country. I had brake work done at one of their shops years ago before finding my independent mechanic (guess who he buys the majority of parts from -- GPC) and was satisfied. Magna makes a lot of parts for the big manufacturers and some after-market stuff. Around here, they used to make trannies and gearboxes before they closed the factory and moved it to a lower cost location. I believe they're more tied to the cyclicality of the OEM auto market than the other two but has weathered the ups and downs in the market quite well.
If I had my druthers, I'd go with GPC because just about every mechanic around here purchases parts from them. You're right, the repair market is pretty steady and many people choose to have repairs done at other than the dealer's shops.
Superior Industries (SUP) is an intriguing idea. Looks like a lot of their sales go to the OEM market. Some of their stats didn't seem so bad, current ratio over 3, price/sales of 0.6, price/book a little over 1.0. Then I started scanning some of the other stats. PEG over 12, latest earnings a 20% decrease just as auto sales are starting to improve, profit margins/ROE/ROA all less than 5%, a market cap of only $468 million for a company as old as I am seems a little small for being in business for 50-some-odd years. Nothing wrong with small caps but if it's going to continually share its profits with shareholders by increasing dividends, it needs to keep growing. The clincher for me was the dividend. Go to longrundata.com, put their symbol in the dividend section and look at the graph. I bought a set of their after-market rims years ago and was satisfied with the quality once the dealer found 4 fairly matched rims for trueness and balance. That would give me pause. Finally, it's a one time buy for the average consumer and not many do.
Douglas Dynamics (PLOW) is a much more interesting idea although another small cap. I recognize the brand names since I see them around here often in the winter but they're only going to sell to less than half the country. Don't know if they also market in Canada but overseas sales are probably low to non-existent for a $400 million market cap company. Stats are more comforting with profit margin and operating margin in the double digits, current ratio around 3.6, ROA=9%, ROE=16% and quarterly earnings are up by a wide margin (triple digits). Then I got to the dividend. Payout ratio over 100% and a short & very erratic dividend stream. Don't know if FCF can cover the dividend since I didn't dig any further.
Both seem speculative to me with PLOW seeming to be the better choice but I'd look closer at Eric's suggestions.
GPC is a great company with a good long term record. You probably know them as NAPA or Echlin. NAPA stores are everywhere including many of the small towns around me in hickville. Monro, of course, does mufflers/catalytic converters and has numerous repair shops across the country. I had brake work done at one of their shops years ago before finding my independent mechanic (guess who he buys the majority of parts from -- GPC) and was satisfied. Magna makes a lot of parts for the big manufacturers and some after-market stuff. Around here, they used to make trannies and gearboxes before they closed the factory and moved it to a lower cost location. I believe they're more tied to the cyclicality of the OEM auto market than the other two but has weathered the ups and downs in the market quite well.
If I had my druthers, I'd go with GPC because just about every mechanic around here purchases parts from them. You're right, the repair market is pretty steady and many people choose to have repairs done at other than the dealer's shops.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan