TTC Stock: Toro Co Is The Best Micro-Cap Stock You’ve Never Heard Of
Profit Confidential | Mar 05, 2016 09:30PM ET
Despite the enormous number of publicly traded companies that are listed, at any given time, there are actually very few really good businesses out there—Toro Co (NYSE:TTC) stock is one of them.
For Toro, which operates out of Bloomington, MN, lawnmowers and sprinkler systems really are that good of a business.
This stock is one my long-time favorites. It’s certainly not the fastest growing micro-cap enterprise in the marketplace, but who cares? This is a proven wealth creator for stockholders.
Plus, it’s still reasonably priced on the stock market and it pays a dividend.
Naturally, you are not typically going to hear about Toro Co stock in the media because the business does not provide much in the way of hype. But that’s okay, because frequently, it’s the market’s esoteric special situation companies that actually turn out to be the best risk-adjusted wealth creators over time.
Toro Co manufacturers its own branded equipment used for turf maintenance, snow and ground working, irrigation, and outdoor lighting. The company mostly sells to the professional contractor and rental markets.
In the first quarter of 2015, the company purchased BOSS professional snow and ice management business. Some of the company’s existing brands of equipment are Toro, Lawn-Boy, Exmark, Pope, and Irritrol.
The chart for TTC stock is featured below:
Chart courtesy of www.StockCharts.com
In terms of economic reality, Toro stock is not fast growing. The company’s 2016 fiscal first-quarter sales, ended January 29, 2016, increased only 2.6% to $486.4 million.
But the company’s bottom-line earnings were $39.0 million, or $0.70 per share. This was a solid improvement over the same quarter in 2015, when earnings came to $31.0 million, or $0.54 per share, representing an improvement of 29.6%.
With its latest earnings announcement, the company increased its previous 2016 fiscal guidance. Total sales are expected to grow about four percent over last year. Earnings per share should come in between $3.85 and $3.95, representing a gain of 8.5%–11.0%.
Then there is the company’s dividend, which often isn’t offered in the micro-cap space. It’s not the biggest in the world (currently yielding approximately 1.5%), but management does have a solid history of increasing dividends to shareholders and this is an important trait.
h2 The Bottom Line on TTC Stock/h2
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In this market, it’s tough for any business to produce genuine business growth. But, similar to other existing winners, institutional investors vote with their wallets and the fact that TTC stock just bounced off another new all-time record-high is telling.
This is a solid business with a proven track record and the ability to weather the business cycle, which not a lot of companies can offer.
Next year’s earnings-per-share (EPS) growth should, once again, be in the double digits. And this is from a traditional manufacturing enterprise, which is an accomplishment.
Selling to golf courses and professional contractor markets is useful. If the manufactured product can hold up under constant use, these groups can form a loyal customer base.
Toro Co stock is worth keeping on your radar for major price retrenchments or market corrections. As mentioned, very often in the stock market, some of the best wealth creators are the companies you never hear about, just like TTC stock.
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