When President Obama's armored limousine got stuck in Ireland
this May as it exited the U.S. embassy, it was this towing
company's equipment that freed his vehicle, known affectionately as
Since receiving the president's nod,
Miller Industries (NYSE:
-- the world's leading towing and equipment recovery firm -- has
been gaining attention. The Tennessee-based company sells tow
trucks, recovery vehicles, auto transporters and more and markets
them under a number of reputable brands, including Century, Vulcan
to a multi-year high during this past June 13 trading week. The
stock now appears to be forming a highly-bullish
, offering an opportunity to potentially make a quick trading
The flag is marked by the "flag post," in this case a large white
engulfing candle, and the downward-sloping "pennant," which
represents trading activity through the remainder of the week.
Flag formations typically resolve bullishly, creating buying
interest that generally results in the stock moving higher and
higher over time.
As this six-month daily chart shows, the stock is in a steady
uptrend. But until recently, it has been capped by resistance
On Monday, June 13, however, shares shot up nearly $2, forming a
very long bullish candle. The next day, the stock continued to
rise, peaking at a multi-year high of $17.85.
Although the stock pulled back during the remainder of the week,
the technical pattern is that of a highly-bullish flag formation,
which typically leads to higher prices.
From a fundamental standpoint, Miller also looks poised to move
higher. Shares are being lifted by strong sales. The company
recently reported an increase in government-related contracts as
well as strong demand for its products domestically and in Europe.
In early May, the company announced strong first-quarter results.
Revenue for the period increased 50.7% to $108.9 million, from
$72.3 million in the comparable period a year-ago.
The company is cautiously optimistic about the remainder of the
2011 year but expects second-quarter revenue to increase about 8%
to $87.8 million, compared with $81.3 million in 2010.
For the full 2011 year, analysts project revenue will increase 24%
to $380.6 million. By 2012, revenue is projected to edge up a
further 6.4% to $405 million.
outlook is similarly strong.
Due to stronger sales
on manufactured products as well as improved production and
successful cost reduction initiatives, first-quarter 2011 earnings
per share surged 270.6% to $0.61, compared with $0.17 in the
year-earlier period. Analysts expect second-quarter earnings to
increase around 19% to $0.31, from $0.26 per share.
With strong growth projected over the full 2011 year, analysts
expect full-year earnings to rise more than 60% to $1.54, from
Miller is also attractively valued based on its low trailing
) ratio of about 12 and forward P/E about 11. The stock also has a
) ratio of about 0.6.
company with $39.1 million in cash and only $33,000 in
, the company has the financial freedom to take measures to
increase shareholder value. As a result, in mid-May, Miller
announced the initiation of a $0.12 per quarter
. This gives the shares a reasonable
of almost 3.0%. The company also announced a $20 million share
Action to Take -->
Given that Miller currently appears technically bullish, has a
solid fundamental growth outlook and is attractively valued, I plan
to go long on the towing equipment company.
To take advantage of the bullish flag formation, I will enter a
position at the opening of trading on Monday, June 20. My target is
$25.84, the stock's 2007 high. My stop-loss is near long-term
support around the $12.60 mark. The risk/reward ratio is about
-- Dr. Melvin Pasternak
P.S. -- If you're an income investor, why would you buy a stock
yielding 2% when you can find one paying 26% right here? Watch this
presentation for more.
Disclosure: Neither Melvin Pasternak nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.
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