Research Notes: Tow Trucks And Love Matches
In response to reader requests, we take a look at Miller Industries and Bumble.
We respond to a couple of reader requests.
Up 45% YTD, small-cap tow truck manufacturer Miller Industries still looks like it has more upside ahead — as long as the cycle co-operates.
There’s a bull case to be made for Bumble on paper — but without improvement to margin and revenue per user, that case isn’t likely to play out.
We take a look this week at a pair of tickers requested by subscribers. We planned to also cover AMSC but that’s taking a little longer than anticipated and will likely be published next week. Please feel free to suggest any others in the comment section! We’ll start with one of the year’s bigger small-cap winners, Miller Industries.
Miller Industries: Is It Just The Cycle?
Back in February, we highlighted Canada Goose GOOS 0.00%↑ as an example of just how difficult it is to invest in this market. We wrote then that the core question for an investor (or at least our style of investor) is, “What is this business worth?” At the time, our half-joking answer was, “Who the hell knows?” Given so many cross-currents from the pandemic, supply chain backups, significant (yet now receding) inflation, trying to calculate the actual earnings power of a business requires analysis of so many external factors — and, to be honest, quite a bit of guesswork.
A similar sense holds now for Miller Industries MLR 0.00%↑. Shares of The World’s Largest Manufacturer of Towing and Recovery Equipment (the phrase is capitalized because Miller has a registered trademark on it) have risen 45% year-to-date. Year-to-date revenue is up 40%, including 49% growth in Q2. Pre-tax income has more than quadrupled year-to-date. Yet on their face the shares still look ridiculously cheap.