SwingTrade Member Forum

[MikeDDKing]

UPG is now a member of the favorites list at $2.17. Here is a short list of reasons why I really like them:

1. UPG had very nice earnings in Q1 of this year but it was masked by one-time charges. If they didn't have the one-time charges they would have made roughly $0.13/share. My guess is that earnings for Q2 will be quite nice also but they will not have the one-time charges associated with Q1. http://finance.yahoo.com/news/Universal-Power-Group-Reports-bw-3750769415.html?x=0&.v=5

2. A big part of their one time charges was the buy-out of their primary purchasing agent, Stan Battat, who formerly purchased their products from China. They now intend to deal directly with the Chinese factories thus cutting out the middle man. Last year they paid Stan Battat $2.0M in fees and commissions. If all of that drops to the bottom line that will result in a pre-tax gain of $0.40/share/year. I don't think that one can assume that all of that will drop to the bottom line but I think a sizeable portion of it will. My guess is it is Q3 or Q4 when we start seeing this cost benefit impact their earnings. http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6484363-924-7278&type=sect&dcn=0000930413-09-001442

3. They have a book value of $3.39/share so they are trading substantially under book value.

Note they report earnings tomorrow morning.