This building products supplier is growing at double-digit rates and beat earnings estimates by $0.12 last quarter. The stock was added to the S&P SmallCap 600 last month, providing increased visibility for the company.
Patrick Industries (PATK)
From Upside
Patrick Industries (PATK) has completed six acquisitions so far in 2016, spending roughly $113 million and boosting revenue by nearly $150 million. Patrick, a leading provider of building products to the manufactured housing and recreational vehicle (RV) markets, purchased BH Electronics in August for $35 million—its largest deal this year. BH, a supplier of components to boat makers, generated annual sales of $35 million.
In 2015, Patrick completed three deals valued at $140 million, including the $85 million purchase of a maker of laminated wood products. The company closed four acquisitions in 2014.
Healthy free cash should help fund more acquisitions.
In addition, in July the company increased its credit facility 20% to $360 million. Aside from more deals, new-product launches and product-line extensions should bolster sales. Wall Street sees Patrick growing per-share profits 31% to $3.57 in 2016. Three months ago, the consensus was $3.33. Over the next five years, the consensus calls for 15% annualized per-share-profit growth.
Patrick earns an Overall score of 96, with an outstanding 98 in Earnings Estimates. The stock, up 48% so far this year and capable of climbing another 20%, is a Best Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233- 5922, September 2016