NEW BULLISH Plays
Gentherm Inc. - THRM - close: 51.36 change: +1.30
Stop Loss: 47.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 08, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 529 thousand
New Positions: Yes, see below
Why We Like It:
Sales of automobile and light trucks are soaring in the U.S. According to Autodata the nation's auto sales hit an annualized pace of 17.53 million units in August. That's the best pace since early 2006. One group that is cashing in on this trend are the auto part manufacturers, which are clearly outperforming the actual auto makers.
THRM is one such auto parts company. They are probably best known for their climate controlled car seats. According to the company's website, "Gentherm is a global developer and marketer of innovative thermal management technologies for a broad range of heating and cooling and temperature control applications. Automotive products include actively heated and cooled seat systems and cup holders, heated and ventilated seat systems, thermal storage bins, heated automotive interior systems (including heated seats, steering wheels, armrests and other components), cable systems and other electronic devices. The Company's advanced technology team is developing more efficient materials for thermoelectric and systems for waste heat recovery and electrical power generation for the automotive market that may have far-reaching applications for consumer products as well as industrial and technology markets. Gentherm has more than 8,300 employees in facilities in the U.S., Germany, Mexico, China, Canada, Japan, England, Korea, Malta, Hungary and the Ukraine."
What is you might find really interest is THRM's power generation segment. THRM says that "Nearly two-thirds of the energy produced by a typical gasoline engine is lost through waste heat. A thermoelectric device can capture some of that waste heat and convert it to electricity."
They began working on this project back in 2004. THRM now expects this product to be completed in 2015. They also have a similar business of capturing wasted heat in energy-intensive manufacturing plants, like cement production, glass, and metal production, and generating electric instead of letting the heat escape into the atmosphere.
THRM's sales have been surging. Back in March 2014 they reported their Q4 report and beat estimates on both the top and bottom line while management raised their 2014 guidance. They have continued to beat estimates all year. Their most recent report was August 1st. Wall Street was looking for a profit of $0.36 a share on revenues of $190.51 million. THRM reported $0.46 with revenues rising +28.5% to $206.2 million. Management raised their 2014 guidance again.
In their earnings press release THRM's President and CEO Daniel R. Coker said,
"The excellent results in this year's second quarter followed a very strong first quarter and capped off an exceptional first six months of 2014. We achieved record levels of revenue and profit in both periods and every one of our operations met or exceeded its goals. Revenues for this year's second quarter were again driven by a significant year-over-year increase in sales of our Climate Control (CCS) systems. Operational efficiencies continued to increase in the first half of this year, and our gross margins improved significantly year over year and were again at the high end of our expected range."
The company delivered earnings growth of +106% last year. This year their EPS growth is poised to hit +78%.
Naturally the stock is performing well as investors look for growth. Shares suffered some profit taking in late July but have since recovered. Now THRM is hitting new all-time highs.
Tonight we are suggesting new bullish positions at the opening bell tomorrow morning. We'll try and limit our risk with a stop loss at $47.75.
(launch bullish positions now)
- Suggested Positions -
Buy THRM stock @ (the opening bell)
- (or for more adventurous traders, try this option) -
Buy the DEC $55 call (THRM141220C55) current ask $2.95
Option Format: symbol-year-month-day-call-strike