Saturday, September 6, 2014

Seeking Alpha: Miller Still Underfollowed And Undervalued

As Top Ideas go, Miller Industries (NYSE:MLR) hasn't really worked out so far. Up about 13% since my original late September piece, the shares have done alright compared to Spartan Motors (NASDAQ:SPAR) and Oshkosh (NYSE:OSK), but they've lagged the S&P 500 and Supreme Industries (NYSEMKT:STS). While none of these are particularly good comps (Supreme is more focused on truck bodies, Spartan on emergency response and delivery vehicles, Oshkosh on aerial work platforms, defense, and fire/rescue/refuse), I think the problem is that access to capital for small businesses (and most towing companies are smaller businesses) is still limited and Miller is an illiquid stock with no sell-side support.

I still believe this is a stock that can generate market-beating returns over the long term. Double-digit revenue growth is not the "new normal", but catch-up/replacement spending should generate above-market growth for a few years and the company's offshore growth efforts offer meaningful upside. I'm not looking for particularly ambitious margin improvements, but I think the shares are about 20% undervalued today.

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Miller Still Underfollowed And Undervalued

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