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Studying LCI Industries (previously Drew Industries
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this seems like a fairly solid company. Picked it up from SCI and Quality Roster. I have about $10 overpriced at moment. But charts show a lot of activity in last few weeks. I was a little confused for awhile as up until sometime in the last few months they changed their name from Drew Industries.
Not sure about parts supplier for RV industry in the future. Seems to be trend of increased RV travel within US. I wondered about manufactured housing dropping off when the need for housing, especially affordable housing, is increasing.
I am very conservative with my SSG. I have 9% project EPS with buy $71-$97 with $92 if I have goal of 15% return and U/D of at least 3.
Anyone studying this company or have any suggestions, comments. Thanks. Lynn
P.S. Have call into company to inquire whether they have women in their leadership development program as no women in upper management nor on the Board.
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Rank: Administration
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This is an interesting company. It is also nice that it is a midcap company. Many clubs and individuals seem to have problems finding small and midcap companies to add to their portfolios.
I did a quick SSG and had a buy up to 98. I used an EPS growth rate of only 7.5% with a high PE of 22.3.
I lowered the EPS growth rate due to the company's low earnings predictability from Value Line. It is rated at 25 out of a possible score of 100. This rating is a comparison to all other Value Line followed companies. The Value Line estimated EPS growth rate is 14% so I am being pretty hard on the company for their lack of predictability.
The company still looks good with that low EPS growth rate. It has a couple of other good points I noticed- both % pre-tax profit and Return on Equity are rising.
I do have 2 major concerns about outside forces but the news recently has been good.
RV sale historically have been linked to employment and steady or rising wages. Recent news here has been good. Employment is still rising and even hourly wages have started to increase.
The other issue is oil prices. In the past spikes in gas prices cut into RV sales. I think recent news here is good for this company. While OPEC has cut production to increase oil prices most of the big suppliers have budget issues. Russia, Iran, Venezuela and Saudi Arabia all have budget issues and oil revenue is crucial for all. It will be difficult for them to decrease production much more. They are also caught in a bind due to American drillers. Many American wells were mothballed when oil prices dropped. These wells will be back in production when oil prices start to rise. I believe this will put a damper on oil prices for the near future.
Barring dramatic changes in the current situation the near future looks pretty bright for LCII. I want to do a bit more research but your post definitely has me considering this company for purchase. I recently sold some midcap shares and I am looking for a replacement. This is a candidate.
Russell Malley
StockCentral Community Leader
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Studying LCI Industries (previously Drew Industries
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