As I mentioned in the earlier post I just returned from the Red Chip Review/Silicon Investor Small Cap Conference and was very impressed with Summa Industries. I will mention a few of the points that I find attractive. As I am new to this company and this thread forgive me if some of this is old news to you.
Summa has grown it's top line over the past few years by approximately 110%, primarily through the acquisitions of Falcon Belting, Lexalite International, Calnetics Corp., and the assets of Canyon Mold. They have also grown internally at about 7% per year. The president and CFO, James Swartout, mentioned today at the conference that they just acquired Plastron Industries. This is important because it allows Summa to get into the high growth industry of plastic bobbins which are widely used in the telecomm industry amongst others. This should add $0.05 to their EPS this fiscal year.
Summa does not rely on any one customer. Last year they sold to 3400 different customers, including such names as GE, Dupont, Phillips, Hubbel, Kellog, Campbell, Del Monte, Frito Lay, Nabisco, and Sara Lee.
They expect to see a new technology they developed to alter the beams of flourescent lighting to be highly profitable for them. Keep your eyes on news releases regarding this technology.
In 98 they earned $1.03 per share and in 99 are expected to earn $1.34 and in 00 $1.55. At $9 per share it is trading with a PE of about 9. Most of their publicly traded competitors (FCY, UTCI, SEH, MYE) all trade with PE's in the range of 10-20. The book value per share is almost $7. With only 4 million shares outstanding it won't take much Wall Street recognition to get this stock moving.
The president and CFO, Patrick Swartout, personally buys $10,000 worth of stock every quarter and plans on continuing this until the market correctly values Summa.
The company plans on continuing to grow through acquisitions. They feel they will make 8-10 more acquisitions over the next 3-5 years.
Only one analyst follows the stock and there is virtually no institutional ownership. I know I am getting in now before the institutions hear about this gem.
BRA Trading
Please let me know if you have any specific questions about their presentation. |
