Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.
As I work through the process of finding new stock market investment ideas, I first like to look through the lists of stocks that are showing strong upward momentum. In practice this means checking the lists of top percentage gainers for the day!Reviewing the list of top % gainers on the NYSE today, I came across Tennant (TNC) which appears to fit my idea of a good idea for an investment! As I write, TNC is trading at $47.85, up $2.50 on the day or 5.51%. I do not own any shares or options on this stock.
According to the Yahoo "Profile" on TNC, this company "...engages in the design, manufacture, and marketing of products used primarily in the maintenance of nonresidential surfaces. Its products include machine products, including carpet cleaners, floor coatings, brushes, detergents, floor maintenance equipment, outdoor cleaning equipment, coatings, and related products, as well as vacuums, sweepers, and scrubbers are used to clean factories, office buildings, parking lots and streets, airports, hospitals, schools, warehouses, and shopping centers."
One of the first things I like to check when looking at a possible "selection" for the blog, is the latest quarterly results. I insist on growth in both earnings and revenue in the latest period. Tennant reported 3rd quarter 2005 results on October 27, 2005. Net sales came in at $137.8 million, up from $120.5 million last year for the quarter ended September 30, 2005. Net earnings grew to $6.3 million, or $.69/diluted share, up 123% from the $2.8 million or $.31/diluted share last year. In addition, the company raised guidance for the remainder of 2005.
How about longer-term?
Reviewing the Morningstar.com "5-Yr Restated" financials on TNC, we can see that revenue has climbed steadily, except for a dip between 2000 and 2001, from $452.2 million to $523.0 million in the trailing twelve months (TTM).Similarly, earnings, which dropped from $3.04/share in 2000 to $.50/share in 2001, have also steadily increased since then to $1.90/share in the TTM. Free cash flow has been solidly positive, increasing from $6 million in 2002 to $18 million in the TTM.
The balance sheet, as presented by Morningstar, looks nice with $22.3 million in cash and $156.2 million in other current assets. This is plenty to cover both the $72.2 million in current liabilities and the $26.1 million in long-term liabilities more than 1.5 times over.
Looking at Yahoo "Key Statistics" on TNC, we can see that this is a very small company with a market capitalization of only $429.15 million. The trailing p/e is a reasonable 19.33 with a forward p/e (fye 31-Dec-06) even nicer at 16.53. There is no PEG listed, but with the latest quarter showing dynamic growth, this would likely be under 1.0 (imho).
Using the Fidelity.com eresearch website, we can find that this company is in "Diversified Machinery" industrial group, and is a relative bargain on the Price/Sales basis. Topping this list is Roper Industries (ROP) with a Price/Sales of 2.7, Idex (IEX) at 2.2, Illinois Tool Works (ITW) at 1.9, and Ingersoll-Rand (IR) at 1.3. At the bottom of the list is boath Eaton (ETN) at 0.8, and Tennant (TNC) at 0.8 as well. Looks like a nice value for this company on this basis.
Finishing up some additional information from Yahoo, we find that there are only 8.95 million shares outstanding with 222,510 shares out short representing 2.50% of the float or 4.5 trading days of volume as of 10/11/05. This is somewhat significant and may be adding to the buying pressure we are observing.Interestingly, (is that a word?), the company does pay a small dividend of $.88/share yielding 1.90%. The last stock split reported by Yahoo was a 2:1 split in April, 1995.
What about the chart? Taking a look at the "Point & Figure" chart on Tennant (TNC) from Stockcharts.com, we can observe that the stock has moved sideways pretty much since 2000, and only recently, broke through resistance at $38/share in August, 2005, and has moved strongly higher since. At least over the short-term, the chart looks strong to me.
So what do I think? This is a fascinating stock pick imho. If only I had a signal to be buying some stock...well that is another post altogether! I like the latest quarterly report, the past five years results looks nice with the company growing both revenue and earnings (except for a dip between 2000 and 2001), free cash is solidly positive, and the balance sheet is nice. The company even pays a dividend. The P/E is low and the Price/Sales is the lowest in its group. The chart shows upward movement but certainly is not overvalued or overextended imho.
Thanks so much for stopping by and visiting! If you have any comments or questions please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.
Bob