“—Special Winter Bulletin—
“Polar Vortex or Not… Old Man Winter Is Making Us A Blizzard’s Worth of Profits
“Look for at least 50% profits in one company that thrives during times of severe winter weather in North America….”
That’s the intro to the teaser pitch from Louis Navellier that caught my eye when I returned from my Thanksgiving travels — the ad was clearly timed for the snow that so many folks received during Thanksgiving week, and the horror stories from Buffalo, NY where they got five FEET of snow in their late-November storms.
So what’s he pitching?
It’s a company that is somehow connected to snow removal equipment, like snowplows, and it’s based in Wisconsin and — thanks to the “polar vortex” — had a huge year last year with blowout growth numbers and a stock that surged after their Winter quarters. And Navellier seems to think this will be happening again, and that it should be starting already with the early snowstorms this year.
Some more about this “secret” company?
“This company has been making money from snow and ice for more than 65 years. It dominates the North American snow removal business—and has even expanded its business to Europe and China.
“So how has it grown into such a successful company? It sees an opportunity and it jumps on it.
“Back in the early ‘50s, this company was just a small welding shop with a line of snowplows for Jeeps and small trucks. But management strived for something much, much bigger…
* In the early ‘80s, it purchased a Maine snowplow manufacturer.
* In 2005, it scooped up one of the most innovative and exceptional snowplow lines on the market.
* In 2013, it acquired a highly regarded line of ice control equipment.
“Today, it is the leading manufacturer of snow plows and snow removal equipment in North America, with six well-known and trusted brands that are always in hot demand when winter weather strikes.”
So it’s an established company, and it sounds like they must be a “pure play” on snow in some way — which stock is he teasing?
To make sure we get enough clues to feed the Mighty, Mighty Thinkolator we read on down the ad a bit more, checking the hints about the financials…
“The consensus estimate has been revised sharply higher for our #1 Winter Stock’s earnings for the coming quarter and for full-year 2014.
“In fact, in the past 30 days, analysts have revised their estimates 78% higher for the fourth quarter.
“Fiscal year 2014 estimates have been lifted 30% higher in the past 30 days.
“As I tell my Emerging Growth subscribers, such aggressive analyst revisions higher typically precede another positive earnings surprise.
“So it’s no wonder that investors are starting to take notice. Shares have bounced 25% higher in the past two months alone.
“But mark my words, this is just the beginning.”
Growth momentum, analyst estimate increases and earnings “beats” are key drivers for Navellier’s quantitative system of picking stocks, so most of the time when he’s picking a stock it will have a solid string of big earnings “surprises” and analyst upgrades, part of the very powerful “beat and raise” cycle that drives investor enthusiasm and often makes stocks surge higher.
So which one is it this time? This is Douglas Dynamics (PLOW), which is pretty small (market cap around $500 million) but is probably the only publicly traded “pure play” on snow equipment — they are primarily known for making plows and similar truck attachments, with the company’s roots being in the Western and Fisher brands that effectively merged in 1984 (Western, renaming itself Douglas Dynamics, bought Fisher Engineering), and they did make a big acquisition in 2005 to take over an innovative plow brand called Blizzard, followed by smaller acquisitions in ice and snow control equipment and, just last week, in DOT-grade plow equipment specialist Henderson.
And it’s that Henderson acquisition that actually catches my eye most — that should give them a substantially smoother revenue stream, which is a great fit because the focus on sales to contractors, individuals and smaller operations at Douglas’ other brands is much more erratic, weather-driven and seasonal. State departments of transport