More From Keystone FinancialYes he's banging his firm's drum but hard to argue with this kind of success. GLTA
Hammond Power Solutions Inc. (HPS.A:TSX)
Price: $68.96
Market Cap: $809.057 Million
Company Description: With a history that dates back 100 years, Hammond Power designs and manufactures custom electrical engineered magnetics, standard electrical dry type, cast resin and liquid-filled transformers. The company offers autotransformers, buck-boost transformers, control transformers, distribution transformers, drive isolation transformers, encapsulated transformers, furnace transformers, multi-pulse transformers, padmounted transformers, regulating transformers, and medium voltage distribution transformers, as well as reactors, active harmonic filters, dV/ dT filters, and unitized substations. The company serves the oil and gas, mining, steel, waste and water treatment, commercial construction, data centers, EV charging, energy storage, solar, and wind power generation industries. Hammond Power has manufacturing plants in Canada, the United States, Mexico, and India.
Hammond is up 244% year to date and 325% from when we recommended it at our Fall 2022 seminars in the $16 range last fall.
We also recommended Hammond at $7.26 in 2017 and it has gained 836% since that time, but we can trace Hammond right back to our original recommendation in the $0.60 range, it has gained 11,808%
Event: On October 26, 2023, of this past week Hammond Power reported
Quick Details: Q3 2023 Highlights:
- Record sales of $179 million in the quarter, a 20.5% increase versus 2022. Year-to-date sales of $523 million, a 26.3% increase versus 2022.
- Net Income of $14.4 million in the quarter, a 25.2% increase versus 2022. Year-to-date net income of $43.5 million, a 63.5% increase versus 2022.
- Earnings per share of $1.21 for the quarter and $3.65 year-to-date.
- Order backlog increased 11% versus Quarter 2, 2023 (sequentially) and 40.3% as compared to Quarter 3, 2022 (year over year).
I am not going to comment too much on valuation and our current rating as we will update clients fully this week.
Valuation:
Following the results, Hammond Power trades at a trailing PE of 13.74 and an Enterprise Value/EBITDA of 9.82. Balance sheet is solid with a strong net-cash position.
Our Take:
Hammond Power is a tremendous overnight success story 100+ years in the making. It is an excellent example of what KeyStone’s discovery type research can bring to a portfolio. Despite the fact that Hammond is one of, if not the best performing stock on the entire Toronto Stock Exchange in 2023, not a single analyst covered the stock back in 2000, when we recommended the stock in 2017, at the start of 2021 as a Focus BUY or last Fall when we recommended it to those who attended our Fall Live Webinars. Just now with the stock up thousands of percent are we starting to see Bay street pay attention. Why? Hammond has never needed big bank or brokerage money to fund its operations – these are the best types of businesses, but Bay street pays them little attention and it is to the detriment of Canadian investor portfolios. Fortunately, our independent research can fill the gap and provide our clients with recommendations on unique underfollowed companies like Hammond Power that should be in a well designed portfolio.
In tough times, investors need these type of tremendous winners in their portfolios more than ever.