Today’s buy idea, from Richard Moroney, is for growth investors. This small company ($311 million market cap) has growing revenues and earnings, and the stock is showing accelerating momentum. Moroney is also taking profits on a recommendation from last August.
Shiloh Industries (SHLO)
from Upside
Founded in 1950, Shiloh Industries ($15; SHLO) is a leading supplier of metal products to automotive, truck and industrial markets. The company’s engineered welded blanks, cut from flat-rolled steel and used for fenders, hoods and doors, accounted for 49% of sales in 2012. Its metal stampings and assemblies, used in powertrains and seats, represented 27% of revenue. Shiloh is leveraged to the U.S. auto industry and has long partnered with General Motors (25% of 2012 sales) and Chrysler (19%). The stock earns an impressive Quadrix® Overall score of 98, reflecting strong scores for Momentum (97), Value (90) and Earnings Estimates (89).
An improving economy and continued production increases for the auto industry should drive growth. Only one analyst offers estimates for Shiloh, with per-share profits for fiscal 2013 ending October projected at $1.26, up 64%. Revenue is expected to be up 19%. For fiscal 2014, per-share earnings are expected to increase 30% on 22% sales growth. Shiloh, trading at 14 times trailing earnings and nine times estimated 2014 profits, seems cheap considering its growth prospects. Shiloh is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, November 4, 2013