Hammond Power Solutions Inc T.HPS.A

Keystone Financial (Ryan Irvine)

[retiredcf]

Blowing their own horn but it's all good. GLTA

Hammond Power – has been a tremendous success story from our Canadian Growth Stock Research. Hammond enables electrification through its broad range of dry-type transformers, power quality products and related magnetics. Basic, boring business with huge growth that traded at very low valuations, eve to start this year. The stock is up 138% year to date and 435% since the start of 2022.

It is a great example of our research because there has been no other research firm with coverage on the stock over the last decade – and back even further. Hammond Power is literally the best performing, revenue producing stock on the Toronto Stock Exchange, and not one of the Big Banks, Brokerages, or boutique investment houses even bothered to cover it. Despite tremendous growth and a great investment theme.

Why? I will let you in on a little secret. Banks make their money from conducting financings for public companies. Hammond Power did not need capital, and the Street ignores it. So, if you are a client of the Big Banks, you would not have known about this stock. It is up over 4,500% in the last two decades – but you would never see it on BNN or in your portfolio…unless you used our research.

[retiredcf]

Left off their last comment.  Is it the next Boyd? Perhaps, but it still has a long way to go to get to 10,000+ percent gains that Boyd has produced.

[Catscratch]

A long way to go to deliver a return anywhere close to Boyd.  Still seems like early days for Hammond... often the hardest thing to do with a winner is to simply hang on.... don't watch the stock too closely.

[microcaphobby]

It's only hard to hold when the stock trades at frothy levels. I think they will make at least $5.00 a share this year. P/e of 10 is still cheap. Frothy might be 20X earnings.

[Catscratch]

Agreed but my guess is you are little more disciplined that the average investor (who has a tough time staying disciplined when sitting on gain).  What about a scenario where a stock stock hits 20x on trailing basis but delivers 100% growth in earnings of the next twelve months.  Holding through that is challenging but can result in massive gains. I think EPS of $5.00 to $6.00 per

[undervalue]

When you sell 100% of plant capacity, you are going to make a lot of margin. HPS is expanding capacity and the timing  remains to be seen as to which quarter it will start. Add that additional volume into earning power and numbers over $5 or 6 a share should happen in time, place an expanding multiple into the mix, $50 may look cheap next year. The $75 expectation is not out of line. 

[Catscratch]

Indeed.  When a company is in transition to long term growth it's helpful to try to think forward 3 to 5 years to stay disciplined.... Can Hammond get to $200M+ in EBITDA over this time period?   Can we see multiple expansion to 10x EBITDA?  ... I think both are achievable and support a share price over $150 over this time frame.