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MCBC Holdings Inc.: Calm Waters Ahead

Patrick Doyle profile picture
Patrick Doyle


  • I think investors would do well owning shares of MCBC Holdings Inc., given the various growth drivers in the recreational boating industry.
  • The acquisition of NauticStar seems to be going better than expected.
  • I offer a reasonable option strategy to mitigate the low risk here.
  • The stock is inexpensive, and has excellent insider and institutional support.

Over the past twelve months the shares of MCBC Holdings Inc. (NASDAQ:MCFT) are up about 35%. I think there’s still value here, and so I’ll go through my reasoning for buying by looking at the financial history, and by reviewing the stock itself. I’ll make an appeal to authority, and I’ll suggest a slightly safer way for an investor to invest in this name. Since there is no dividend, the opportunity cost of shares versus options is zero. For that reason, I’m going to recommend that investors who are comfortable doing so participate in any upside by selling put options on this stock.

Founded in 1968 and headquartered in Vonore, Tennessee, MCBC Holdings Inc. is the parent of iconic MasterCraft Boat Company, manufacturer of premium performance sport boats. In October of 2017, the company acquired NauticStar Boats LLC for $80.5 million. NauticStar is a manufacturer of 18-28 foot boats that diversify MCBC’s product family a great deal (for example, they provide MasterCraft with a presence in saltwater fishing). At the time of acquisition, NauticStar sold its boats in the United States through a network of 70 dealers. Since then, 18 dealers have been added, and NauticStar production has increased by one boat per day. In my view, MasterCraft will continue to benefit from the various growth drivers we see in the recreational boating industry.

Financial Snapshot

A quick review of the financial history here indicates that this is a growth company that seems to benefit from scale economies. Specifically, over the past five years, revenue has grown at a CAGR of about 7%, while gross profit is up at a CAGR of 15.6%. Earnings per share has grown at a CAGR of about 33%, in spite of the fact that the share count has grown at a CAGR of about 10.8%.

This article was written by

Patrick Doyle profile picture
I'm a quant investment newsletter writer who marries fundamental analysis with the latest research in momentum. Over the past few years, I’ve developed a piece of software that helps me track the level of optimism and pessimism embedded in stock price. I seek to challenge the assumptions embedded in price by profitably exploiting the disconnect between what the market thinks and what is a likely outcome. I invest in those companies that have a greater than average chance of giving us all a surprise in the next few months.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MCFT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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