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I don't normally write articles based on Barchart.com data, such as the top 100 stocks to buy. However, struggling to develop a topic for my Wednesday commentary, I took a closer look at some of the names on the list.
There are a lot of interesting businesses on the list -- although I could do without all the biotech stocks -- that have hit it out of the park over the past 52 weeks.
So, based on the top 100’s performances over the past 52 weeks, here are three I could get behind over the next 52 weeks.
Limbach Has Quite a History
I must admit I had never heard of Limbach Holdings (LMB) before I saw its 52-week return of 330%. However, the provider of building systems -- it provides the guts necessary for commercial, institutional and industrial buildings to function – has the history and experience to keep growing.
Founded by Frank Limbach in Pittsburgh in 1901, the company has taken some interesting terms over the past 120 years.
First, it Survived the Great Depression. That's worthy of recognition. Secondly, it's been owned by both Vivendi (VIVHY) and Enron in the century or more it's been in business. It survived Enron’s bankruptcy, bought out of bankruptcy proceedings by company management and FdG Associates, a lower-middle-market private equity firm.
Amazingly, it went public through a July 2016 merger with 1347 Capital Corp., a blank check company, often referred to as a SPAC (special purpose acquisition company). You couldn’t write a better script if you tried.
Its stock has increased 141% in the seven years since but not without significant volatility. It hit a low of $4.90 a year ago; it’s been on a tear ever since.
In early May, Limbach reported Q1 2023 earnings of $0.27, more than double the Zack’s Consensus Estimate of $0.12 and a nine-fold increase over last year.
A big reason for its growth in revenue and earnings is: Its ODR (owner-direct relationships) segment continues to grow in importance, significantly outpacing its GCR (General Contractor Relationships) segment.
In Q1 2023, its ODR business accounted for 48.5% of its overall revenue, up 11.1 percentage points from a year earlier. More importantly, the segment’s gross margin was 27.1%, 380 basis points higher than a year ago and 1,050 percentage points higher than its GCR business.
Dealing directly with owners continues to pay dividends to shareholders.
E.L.F. Beauty’s Prices Continue to Attract Customers
E.L.F. Beauty (ELF) stands for eyes, lips, and face. As the company's website states, it's an industry disruptor, selling products that are “clean, cruelty-free and offer unparalleled quality for price.”
Founded in 2004 in Oakland, it went public in March 2017 at $27 a share. The IPO valued the company’s equity at $1.26 billion. Six years later -- thanks to a 319% increase in its share price over the past year -- it’s got a market cap of $5.9 billion, a nearly five-fold increase.
In March, E.L.F. announced that it collaborated with American Eagle Outfitters (AEO) to create a makeup and skincare collection for the retailer’s younger customer base. Full disclosure: my wife used to work for American Eagle. It’s a great way to grow the E.L.F. name outside usual venues such as drug stores.
Analysts currently give it a Moderate Buy rating (4.23 out of 5) with a mean target price of $104.36, below where it’s currently trading.
Given its fiscal 2023 results were off-the-charts good, and it continues to improve its profitability -- its gross margin in fiscal 2023 (March 31 year-end) was 67.0%, 330 basis points higher than 2022 -- I see analysts upping their targets in the weeks ahead.
It’s a comer.
Not Another SPAC
SPACs have not done well in recent years. Many companies that merged with SPACs -- there were approximately 200 SPAC-related mergers in 2021 -- wish they had gone another route, including doing a traditional IPO.
Technoglass (TGLS) is a Colombian-based manufacturer of architectural glass for sale in the U.S., Latin America, and elsewhere. It has 1,000 clients in North, Central, and South America.
In Q1 2018, it had a backlog of $501 million. In Q1 2023, it was $776 million, 19.2% higher than a year earlier. It sells its products in both the residential and commercial markets. Its brands include Prestige, Elite, and Multimax by ES Windows. As of Q1 2023, its trailing 12-month revenues were $785 million, with 56% commercial and 44% single-family residential.
Its gross margins have grown from 31.5% in 2019 to 53.2% in the latest quarter. That has resulted in significant profit growth. In 2023, it expects to generate $830 million in annual revenue with $325 million adjusted EBITDA.
Its stock is up 194% over the past 52 weeks. As a result, its market cap has grown to $2.3 billion.
Oh, yeah, I nearly forgot. Technoglass went public in December 2013 through the merger with Andina Acquisition Corp., a Latin America-focused SPAC. Technoglass had $261 million in revenue and $43 million in adjusted EBITDA at the time of the merger.
In 2020, TGLS traded below $3. It’s come a long way.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
