Just the other day, we discovered a very interesting investment opportunity. This company is a relatively new listing. Often, new listings aren’t very attractive because they can be expensively priced. Sometimes, however, good companies list on the stock market with excellent prospects.
Also, I’ve found that some of the best wealth-creating companies are the kind that most wouldn’t consider “sexy.” Many of the best wealth-creating companies use new technology to their advance, but at the end of the day, they are great businesses because they provide a solid product or service that’s in demand, and they back it up with great customer service.
Case in point, H&E Equipment Services Inc. (NASDAQ/HEES). Did you say equipment services? How boring!!! That’s right, it is boring–but guess what? The company’s doing great.
H&E is one of the largest equipment services companies in the U.S. with 47 full service facilities throughout the Intermountain, Southwest, Gulf Coast, West Coast, and Southeast regions. Based in Baton Rouge, LA, the company rents, sells, and provides parts and service for heavy construction and industrial equipment in four specialized categories: hi-lift or aerial platform equipment, cranes, earthmoving equipment, and industrial lift trucks.
In the fourth quarter of 2005, the company’s revenues grew 41% to $185.5 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 67% to $42.7 million. Net income was $14.7 million, up from $13 million in the fourth quarter of 2004.
In its most recent quarter, every segment of H&E’s business experienced growth. The company expects great things in 2006, so its no wonder this recent initial public offering (IPO) is doing great.
For much of the last 10 to 15 years, technology stocks dominated the stock market’s interest. Now, boring but solid businesses like H&E are once again in style. I suppose Warren Buffett will be pleased.