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Key Tronic Corp. Message Board

  • mawchek mawchek Apr 27, 2011 11:33 AM Flag

    OT-UPG

    I've been buying UPG in the $3.60/3.70 range and think it may interest some posters. Please do your own DD and give me your thoughts.

    UPG was mentioned here many months ago. It appears to have based around 3.60 after diving from the mid-4 range after its 12-31 quarterly earnings disappointed. Frankly I thought the earnings results were reasonably good. RSI recently sunk to below 30 and there is no positive PPS momentum to speak of.

    They lost a sizeable chunk of business from ADT who bought a large UPG customer. UPG has been diversifying its customers/revenues since then with decent results. They also made a small acquisition.

    PB is .84 (all tangible), P/S is .17 and TTM PE is 6.5. Earnings were up in 2010 over 2009.

    Cash is at a low ebb but overall BS liquidity seems fair. It's a low float stock and has an odd management structure with the Chairman, CEO and a senior officer having family ties. Rising lead prices may be an issue for this battery seller but aren't cited as a risk in the 10-K. For that matter, lead has been falling in the past few weeks.

    Not perfect but maybe one you'll like. Good luck.

    Mawchek

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    • I just bought one of their products. It is the Energizer brand all-in-one jumpstarter gizmo. It works as a jumper battery, 12V and 120V power supply, light, and air compressor. I will use it to power some stuff while on trips. It should come in handy.

    • I have kept an eye on this company for years. I owned some in 2007 and took a small but quick profit. Here are a couple of comment from my perspective. I agree with your assesment.

      Two concerns are the low cash and high inventory in relation to sales.

      The governance and accounting score from Audit Integity has them in the 95 percentile.

      I am assuming ADT bought Brinks which at one time accounted for over 50% of revenues. That was always an investor concern and I think was a drag on price. Now that some of the business has gone away, the world has not ended and life goes on. Maybe they will be valued a little higher.

      A few months ago, a number of battery companies hit my screens like ABAT.PK and TNRK.PK. I am not endorsing these companies but I think the sector is a little depressed over concerns from foreign competition.

      ZUNI is a very large holder of the stock. At least at one time you could get the equivalent interest in UPG at a significant discount by buying ZUNI. My preference, has been to buy UPG directly though.

      In any case, UPG is very cheap and you got a great deal below 4. I put it back on my watch list but unfortunately did not buy.

    • Mawchek,
      My reply assumed you were saying you bought months ago in the 3s when UPG was mentioned and you either sold and are repurchasing over recent days or you did not sell but are adding to that original position acquired months back. After reading your post again, I'm thinking you meant that you looked at it months ago, but did not buy then and are taking a position in the middish 3s now. What I wrote in my reply to you only fits well given my initial assumption that you bought several months ago....given that, in my reply, I was describing my buying months ago, subsequently selling, and buying again of late as it has given opportunity in the middish 3s.....the price where the hard metrics are gauged in your post.

      What is very impressive about your post is the balance of pros and cons you present to make your case. It is highly objective while reflecting the real attractiveness of UPG when it dips to that 3.60 to 3.70 range. Thanks again and sorry if my reply was confusing since I think I assumed something about your buying actions toward UPG that may not have been intended by your post.

      • 1 Reply to hopeful200
      • Thanks, Hopeful. I appreciate your remarks very much.

        To clarify, we have traded UPG similarly. I was a step behind you on the initial buy/sells so my gain was a tad smaller than yours. I was out of UPG until the days after their March earnings report when I bought a few shares to watch (I pay more attention when I have skin in the game). I started buying in size when it cracked $3.60. I'm now in over my hips.

        Are we catching a falling knife? I'm betting the 200 DMA and low RSI will provide support. The rest is up to management and consumers.

        BTW, I bought some KEQU a few weeks back. It's a small world here in KTCCland.

        Best regards.

        Mawchek

    • Mawchek,
      Very excellent post!!

      I concur with you. I bought with you around 3.6 a while back. I decided to sell it in the mid 4s since it was there and still a ways until their scheduled earnings report. I don't always do that but often do when there's a pretty good gap until earnings and a low-volume runnup taking place. Also, UPG left a gap in the 3s just below where we are. Nonetheless, after I sold, UPG pressed toward 5 and I figured I would end up missing out or buying higher.

      As did you, I thought the earnings report was very decent for UPG's pricing in the 4s just prior to the report. I did stick a limit for a bunch of shares at 3.75 GTC and one day, recently, it closed at that price and I checked my positions, and my order had filled. I've added some more at 3.60 twice now.

      You sized things up nicely. I did mention UPG here a while back but it may have been mentioned by someone else too when you saw it. Regardless, you are mentioning it now and it is a good opportunity in the 3s, IMO. Thanks for bringing it up. I just noted that UPG has hit 4 bucks today on little volume. Any buying will move it right back up, clearly.

      I've bought some KEQU and APT lately where they are trading....(paid 11.30 and 11.47 on KEQU...it's a bit cheaper now). Both of these stocks also have good metrics to make their stock prices look low, IMO

      Thanks, Maw!! All the best, friend,

      Hopeful

 
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