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My scope is to assist private companies both abroad and domestic wishing to go public in the U.S. We invest in the company in the earliest stages, and assist in coordinating their audit, legal RTO or IPO. We also offer M&A identification, execution and consulting, Investors relations... More
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  • HNRG And MLR: Bit Expensive But Still Good To Own 0 comments
    Jul 18, 2014 7:38 AM | about stocks: HNRG, MLR

    The rising tide has taken most U.S. stocks to new highs and valuations look stretched for several plays now. However, it does not mean stocks such as Hallador Energy Co (NASDAQ: HNRG) and Miller Industries Inc. (NYSE: MLR), which have gained handsomely in recent months, are no longer good for investment perspective.

    Colorado based Hallador Energy is engaged in underground coal mining in the state of Indiana. The company primarily operates through Sunrise Coal LLC and supplies mined coal to electric power generation industry. In recent years, coal prices have witnessed downward pressure from natural gas, but Hallador Energy has remained profitable and has gone on to create fresh highs. Analysts at Brean Capital have put a 'buy' rating on the stock with an $11 per share price target.

    Among the positives is a debt free balance sheet which can be leveraged to fund potential acquisitions. Hallador Energy has something of an advantage as its costs are below industry average, thus optimizing margins. These advantages allow it to not even sail through the industry downturn, but also acquire some distressed competitors. With a 10 percent growth in market price over the last quarter, the stock has lost some of its sheen, but a forward price earnings ratio of 12 and a dividend yield of 1.7 percent are some positives prospective investors can find solace in.

    After rallying in excess of 30 percent over the last year, shares of Miller Industries currently trade close to their 52-week high level. The company is a manufacturer of vehicle towing and recovery equipment and has witnessed impressive growth in sales and profits in recent quarters. At a current market price of $19.7 the stock is valued at 21.6 times its earnings, which is not very high, but not exactly attractive from an investment standpoint.

    For manufacturing oriented businesses, book value is an important and accurate valuation metric. Shares of Miller Industries score well on this front as the stock price is only 36 percent above the book value of $14.5 per share. This is quite less than the industry which has valuations averaged at 3.82 times of book values. Dividend distribution has kept pace with rising profits and thus, still remains attractive at 3 percent. Among other positive aspects of the stock are a debt free balance sheet and a clear management focus on expanding into newer markets. Although North America still accounts for nearly 80 percent of its top line, Miller Industries is expanding into other markets including Europe, Asia-Pacific, the Middle East and South America.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: HNRG, MLR
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