TechPrecision (TPCS) — a growth-oriented idea for 2023 — manufactures and sells precision, fabricated, and machine metal structural components in the United States, asserts Faris Sleem, a specialist in low-priced stocks and editor of The Bowser Report.
It operates through two segments, Ranor and Stadco. Its Ranor subsidiary services its customer base with well-engineered, cost-effective solutions to meet their large-scale manufacturing challenges. Stadco supplies flight-critical components for commercial and military programs.
The company is rebuilding its Stadco segment, while its Ranor segment had net sales of $4.9 million and gross profit of $2 million in the second quarter. Its investments in the Ranor segment are already paying off and we believe management will be able to do the same for its Stadco segment.
TPCS quarterly revenue grew 78% yoy to $8.5 million, and it has total backlog of $49.4 million. This backlog is expected to be delivered over the next 1-3 fiscal years with improved gross margins. The substantial backlog in combination with its sizable investments in Stadco make TPCS a long-term investment with high reward.
In addition to its high potential, the company has a strong fundamental foundation. Assets outweigh liabilities 1.7:1 and it has working capital of $3.3 million. While total debt currently outweighs its cash on hand, the company has a history of delivering positive cash flows.
As for its competitive advantage, its products speak for themselves. Stadco has been stable and growing since 1941, serving domestic and international clients. Ranor won Supplier of the Year for Virginia Payload Modules by BAE Systems and the segment has bounced back tremendously in recent years.
We believe that as long as Ranor continues to grow profits and invests efficiently at Stadco, TPCS could go as high as $3 in the long haul.
Additionally, management has expressed interest in uplisting to the Nasdaq, which could improve visibility and liquidity for the stock. Overall, TPCS has healthy financials, high revenue growth, and the potential to create value for long-term shareholders.
The stock is down 13% over the past year despite growing revenues and profits.
