“Miller Industries, Inc. (MLR) is the worldwide leader in the manufacture of tow-trucks and wreckers. A stellar management team has grown this company for 20 years both organically and through acquisitions. The founder of the company, William ‘Bill’ Miller, has made over 40 acquisitions in 16 years, which has helped MLR become the biggest company in the industry. “For the 4Q ended December 2010, sales increased 19% YoY to $79.7 million, after increasing 28% YoY in the prior quarter. Sales were up 8% sequentially, a sign the order rate is picking up after the worst recession in U.S. history. It was the first sequential increase in sales in two years. ... Operating income surged 86% YoY to $6.1 million, after increasing 75% YoY in the prior quarter. Operating income was up 26% sequentially (note the acceleration in growth, the ideal scenario we look for in Top Recommendations). ... Over the last two years, while the competition was struggling to stay afloat, MLR was reinvesting in the business through enhancements made to its manufacturing facilities, which has made the company more efficient. ... MLR has a great management team that has built the largest tow-truck company in the world. But very few people know about MLR yet, which is why it is undervalued based on traditional metrics (it has only one analyst on coverage). Backing out the $46 million in cash, MLR is trading for 0.4 times sales, 0.9 times its tangible book value, and just 8.8 times expected earnings for 2011. Plus, the stock is undervalued based on our NPV models—our fair value is $31 compared to the current stock price of $15. These are all critical and imperative factors making MLR our Number Two Top Recommendation.”
Tom Byrne, The Periscope Report, 4025 Sunset Ridge Drive, Helena, MT 59602, 4/11
