This RV parts supplier is being touted as ‘a stock that can double’ by Motley Fool and is also on the top buy list for Cornerstone Investment Partners.
Drew Industries, Incorporated (DW)
From Validea Hot List Newsletter
Strategy: Value Investor
Based on: Benjamin Graham
Drew Industries Incorporated (DW) supplies an array of components in the United States and abroad for the manufacturers of recreational vehicles (RVs) and manufactured homes. The company also supplies components for adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing, and mobile office units.
It operates in two segments, which include the recreational vehicle products segment (the RV Segment), and the manufactured housing products segment (the MH Segment). RVs are motorized (motorhomes) or towable, such as travel trailers, fifth-wheel travel trailers, folding camping trailers and truck campers. Drew manufactures and distributes a range of products used primarily in the production of RVs and manufactured homes, such as electronic components, windows, slide-out mechanisms and solutions, furniture and mattresses, chassis components, and thermoformed bath, kitchen and other products.
SECTOR: PASS: DW is neither a technology nor financial Company, and therefore this methodology is applicable.
SALES: PASS: The investor must select companies of “adequate size”. This includes companies with annual sales greater than $340 million. DW’s sales of $1,610.2 million, based on trailing 12 month sales, pass this test.
CURRENT RATIO: PASS: The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. DW’s current ratio of 2.44 passes the test.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: PASS: For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for DW is $49.9 million, while the net current assets are $221.2 million. DW passes this test.
LONG-TERM EPS GROWTH: PASS: Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. DW’s EPS growth over that period of 60.9% passes the EPS growth test.
John Reese, Validea Hot List Newsletter, www.validea.com, 877-439-0506, November 4, 2016