I am amazed at how strangely markets react sometimes. Despite a rise in first-quarter revenue and profit, shares of agriculture and construction retailer Titan Machinery
Looking ahead, the company even kept its full-year outlook untouched. Profits remained almost flat year on year, but revenue grew 32.5% from the year-ago period thanks to higher same-store sales for both agriculture and construction equipment. Gross margins were maintained at a level of over 16%.
The important thing to note is that Titan is set for a record 2012. In its last financial year, the company topped its own guidance, nearly doubling its net profit and clocking a solid 51.6% jump in its top line. For this year, Titan is expecting a minimum 17% rise in revenue and 23% rise in net profits compared to last year.
I don't see any reason why Titan shouldn't to do well in the forthcoming quarters. The planting season has started with a bang this year. Prices of essential crops like corn are bouncing back, and agriculture players are brimming with optimism.
The world's largest agriculture equipment maker, Deere
The construction market has also shown signs of picking up. Caterpillar's
The Foolish bottom line
Titan continues to grow its business. Since February this year, it has acquired several dealerships, most of which cater to agricultural equipment. Through these acquisitions, Titan is actually adding more Case IH and New Holland dealerships to its portfolio, both of which are renowned brands of CNH Global
Good numbers and a growing business place Titan in a strong position. As I said earlier, investors probably took it as an opportunity to book some profits in a stock that had gained a whopping 42% year to date (that is, before they shed 21% post-results). I wouldn't be surprised if Titan's stock recovers soon, as it looks like a solid bet in the long run. Keep a tab on all its news and analysis by adding Titan Machinery to your personalized stock watchlist. Click here to add it.
If you're more interested in companies outside of the cyclical manufacturing sectors, we've identified a stock that we believe will crush the market in the year ahead, and which we've dubbed: "The Motley Fool's Top Stock for 2012." This report highlights a company that is revolutionizing commerce in Latin America. You can get instant access to the name of this company by clicking here -- it's absolutely free.