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Bull of the Day: Marine Products (MPX)


Marine Products Corporation (MPX) is cashing in on the strong consumer sentiment. This Zacks Rank #1 (Strong Buy) is expected to grow earnings in 2018 by the double digits.

Marine Products manufactures fiberglass motorized boats including Chaparral and Robalo. Chaparral builds sterndrive, outboard and jet drive pleasure boats, including H20 Sport and Fish & Ski Boats, SSi and SSX Sportboats among others.

Robalo builds outboard sport fishing boats including center console, dual console, walkaround cabin and bay boat models.

It sells its products to a network of 147 domestic and 85 international independent authorized dealers.

Record Quarterly Sales in Q2

On July 25, Marine Products reported its second quarter results and beat the Zacks Consensus Estimate by 5 cents. Earnings were $0.26 versus the consensus of $0.21.

Sales jumped 21.7% to a quarterly record of $87 million, up from $71.5 million in the year ago period. The increase was due to a 13.3% gain in units sold along with a 6.9% increase in the average selling price per boat.

Gross profit jumped 19.6% to $19.47 million up from $16.287 million in the year ago quarter. The profit increase was due almost solely to higher sales as gross margin fell slightly to 22.4% from 22.8% in the second quarter of 2017.

The company is also benefiting from the corporate tax cuts as its second quarter effective tax rate fell to 20% from 30.3% in the second quarter of 2017.

Marine Products also has strong cash flow. It finished the second quarter with $27.9 million in cash and marketable securities, up $6.2 million from the year ago period even though it has continued its share repurchase program and the payment of its quarterly dividend.

The dividend is currently yielding a healthy 2.1%.

Estimates Rise

The analysts got bullish on the company after the strong earnings report.

2 estimates were moved higher for the full year on both 2018 and 2019.

The 2018 Zacks Consensus Estimate rose to $0.82 from $0.78 over the last 2 months. That's earnings growth of 36.7% because it made only $0.60 in 2017.

2019 also looks to be shaping up into another solid year. The Zacks Consensus Estimate has risen to $0.86 from $0.82 over the last 60 days. That's earnings growth of 4.9%.

Shares Up Big in 2018

With consumer sentiment at 18 year highs, it's not surprising that the consumer stocks are doing well.

Marine Products has soared 49% year to date.

It now trades with a forward P/E of 23.8. Investors are clearly buying the growth story here.

For investors looking for a play on the strong economy, Marine Products is one to keep on the short list.

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