Vertrinsic

Hawkins Is a Diamond in the Rough

HWKN has very high quality institutional ownership already, T Rowe Price, GAMCO, Royce, etc. The smart money knows what the future holds for this company


On May 21 11:24 PM BrucePile wrote:

> In addition to their water treatment chemicals, which is a good growth
> area of the future, Hawkins is something of a stealth agri chemical
> play, but without the high profile foibles of a Potash or Agrium.
> These fund darlings have too much of a tendency to follow and amplify
> all the sharp moves of the market, not because of their fundamentals,
> but because of their shear popularity. I don't like the popular,
> high profile names just for that reason. HWKN tends to move more
> independently from the market.
>
> Hawkins certainly has the growth of a fund darling. Their revenue
> growth the last 3 years has been jaw dropping. If you look at a bar
> chart of their eps of the last 10 years, it has the look of an explosive
> growth stock with the recession of '07/'08 merely holding flat a
> hyperbolic curve that is now resuming. You are paying a P/S of 0.75
> (I like any P/S that starts with "0") and a ttm P/E of just 10 for
> this level of growth, not what you'd expect to pay. The price/cash
> flow is 18, more expensive than I like, and there is no insider buying
> to speak of. But they all have a wart or two.
>
> With a tiny float of 8 million shares, any big fund movement into
> this stock could turn it into a rocket. If it should become a popular
> agri chemical play as well as a popular water play, it may attract
> such money. The agri involvement is just a small part of everything
> they do, but CEO John Hawkins said in commenting on a stunning fiscal
> Q1 '09 on 8/7/08 "...we realized higher margins on certain products
> this past quarter given growing demand and a tight supply environment,
> which drove up prices primarily in products serving the agricultural
> sector."