Seeking Alpha
Long only, contrarian, special situations, value
Profile| Send Message| ()  

Titan International (TWI) received a glowing write up "Nice Wheels, Lovely Ride" in Barron's back in early July when it was trading at just under $25 a share. The company provides 75% of the off the road farm wheels in North America. Some of its core customers include Deere (DE) and CNH Global (CNH). Unfortunately, the company soon issued a quarterly earnings report that was light on the top and the bottom lines although both figures were significantly higher Y/Y. The stock plunged over 10% that day and now can be had for some 20% lower than when the company was originally profiled. Given that farmers should have record farm income in 2012 (80% of profits come from the North America agricultural market) despite the drought and its cheap valuations, the stock is providing a great entry point for value investors.

"Titan International and its subsidiaries manufacture and sell wheels, tires, and assemblies for off-highway vehicles used in the agricultural, earthmoving/construction, and consumer markets in the United States." (Business description from Yahoo Finance)

6 reasons Titan is a buy at under $19 a share:

  1. Insiders have bought over 300K in net shares in the last six months.
  2. The six analysts have a median target of $31 a share, more than 50% above its current stock price.
  3. The stock is selling near the bottom of its five year valuation based on P/E, P/S, P/B and P/CF.
  4. TWI is selling at less than 7 times forward earnings, a massive discount to its five year average (28.9).
  5. Revenues are on track to increase just under 25% this fiscal year and analysts expect at least a 10% sales increase in FY2013. It has a five year projected PEG of right around 1 (1.04).
  6. Prior to missing estimates last quarter, the company crushed its previous two earnings reports. Given the lower expectations, I would expect Titan to get back on track in the upcoming earnings report.
Source: Insiders And Barron's Believe Big Wheels Will Keep On Rolling

Additional disclosure: May also initiate long position in TWI in next 72 hours