By Hassan
Malik @hmalik21
One recommendation every
investor should follow is to put money into a competent niche manufacturer. Take
the business of high pressure and temperature piping systems, for instance.
This is an industry that requires dangerous work to be done for refiners and
petrochemical producers. It is a profitable niche. A company worth looking at
within this industry is Team, Inc. (NYSE: TISI).
Here are 4 reasons why TISI could be a buy:
1. Management: Team is under very
competent management. John Owen was recently made CEO. Owen had been CFO of the
company since 1998 and is well accustomed with the historical values of the company.
Greg Boane was appointed Senior Vice President. Boane comes from an extensive
background of relevant financial and operational experience, which will prove
invaluable as the business grows.
2. Future Prospects: The overall building
and maintenance industry is currently in a boom. It has a Zacks Industry Rank
of 53 out of more than 250 companies, suggesting that the individual firms
operating within are well positioned for growth. In the case of Team, the
company has seen solid earnings estimate revision activity over the past month,
which suggest that analysts are becoming bullish on the firm’s short and long
term prospects.
3.
Strong Financials:
Over
the past month, TISI’s quarterly earnings estimates have risen from $0.67 per
share to $0.72 per share. Current year estimates have also risen from $1.97 per
share to $2.00 per share. This has helped TISI to earn a Zacks Rank #2 (Buy),
further underscoring the company’s solid position.
4.
Sustainable
Revenue: 85%
of the company’s revenue comes from maintenance contracts. This means that the
company doesn’t have to constantly chase down new customers. Team’s balance
sheet is pristine relative to others in the energy services sector. During the
last downturn many refineries scaled back temporarily on maintenance; that business
came back strongly in the last year, as have new capital projects, particularly
in Canada.
Team, Inc., then,
seems to be a solid pick in an industry that promises strong growth. Not only
is its industry currently at the top percentile of Zack Industry Research, but the
company is also experiencing solid estimate revisions of late, suggesting it
could be a very interesting choice for investors seeking a name in this
promising industry segment.
To see more of
Hassan’s small cap stock ideas, visit the archive here: www.smallcappower.com/experts/products/hassan-malik
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