Houston Wire and Cable Company Is Hot

Back in December, I added Houston Wire and Cable Company (Nasdaq: HWCC  ) to my Rising Stars portfolio. The argument then was that we had a small company with an excellent reputation that was going to see brighter days ahead thanks to some overdue infrastructure spending.

Yesterday the company released fourth-quarter earnings, and during a solid market meltdown where the Dow lost more than 1%, Houston Wire came blazing through with a nice 15.7% pop to the upside.

How does this company make money for investors? Houston Wire earns it.
OK, maybe that was a cheesy shout-out to John Houseman and the old Smith Barney commercials. But Houston Wire certainly has a lot to smile about. Revenue was up more than 47% compared with the same quarter last year, and organic growth (sales growth excluding acquisitions) clocked in at 22.5%.

Interestingly enough, management noted that while the fourth quarter is typically the slowest of the year, it was even slower than usual due to the lack of activity in the Gulf of Mexico. Seeing as the White House has already given the green light to Noble Energy (NYSE: NBL  ) and BHP Billiton (NYSE: BHP  ) to get started again in the Gulf, this shouldn't be as much of a problem for the company going forward.

And it wasn't just record revenue that the company reported. Gross margins improved more than a full percentage point from last year to their highest level of the year at 21.1%. Further, the company declared its quarterly dividend and increased market share with 98 new customers.

Tomorrow is now
There's no doubt that the market's reaction was largely due to a good quarter. But just as encouraging was management's view for 2011 and on. Demand continues to improve, and Houston Wire sees a broad market recovery taking effect. That said, cost control and expectations still must be kept in check as the recovery continues to be a slow one.

But in general, growth in booked orders for the quarter outpaced sales, and the company's two acquisitions of 2010 (Southwest Wire Rope and Southern Wire) have integrated smoothly into the company's operations -- all good signs that the business is humming along nicely.

The Motley portfolio is happy
Here's one final thought from CEO Chuck Sorrentino on the earnings call: "I now feel that the worst is behind us, absent any major new shocks to the economy. And then we can once again focus on top line growth, margin improvement, and share gains."

It sounds like the company is excited for better days ahead; so am I. Wanna talk about it? Saunter on by my discussion board and let's talk; you can also follow me on Twitter.

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. Click here to see all of our Rising Star analysts (and their portfolios).

Stock Advisor analyst Jason Moser owns no shares of any companies mentioned in this article. The Fool owns shares of Houston Wire & Cable. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1459237, ~/Articles/ArticleHandler.aspx, 9/3/2014 2:34:20 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement