Motorcar Parts of America Inc. (MPAA)

[littlefish]

Darn thing can't seem to sell off. Ya you won't get a weak Q coming up. My guess is they do 20+ cents EPS on around $37 mill.
He mentioned revs $145+ mill for the fiscal year which equates to $36.5 mill per Q next 2 Qs (with some upside potential).
He mentioned paying back their debt in the next 2 Qs so that pretty much IMO guarantees you the upcoming Q will not be a miss since he mentioned that AFTER the Q closed (on Jan 11 he said it). Although as we've discussed they get one times in there that need to be factored.

They had about $19 mill in debt so that is very healthy cash flow he is predicting. IMO though some of that I would guess is tied to the factoring agreement kicking back in but he did not clarify that. Even so we're still talking very healthy cash flow operationally outside that possibility.

With interest expense costing about $1 mill per Q pretax, that could drop a few cents per Q to the bottom line going forward in the 2nd half of 2010 and beyond unless they tap their credit facility for other purposes.

They have several tailwinds feeding them and are in a recession-resistant industry. They are getting their toes into new customers and areas. They are improving cost of manufacturing which helps margins for several Qs going forward although has the writedowns of inventory because of the way they acct for it (production cost). This shows margins should strengthen further going forward assuming pricing for product stays flat. They have raw materials costs helping them near term. They are increasing productivity and have lots of capacity available to help with some of their recent revenues/avenues for growth.


Nice to have these easy ones.

I was beginning to worry since not finding anything majorly new for about a year from the initial top 3 I had last year (SMID, EGMI, and AYSI to start the year and mostly just AYSI to end the year as sizeable position since I sold down most of EGMI fairly early in the year with their lack of Level 3 asset visibility and most of SMID as well although I have a chunk of SMID still).

Last year was a cherry pick year to make money. This year may well be tougher. With that in mind and needing the 20% a year level to keep family happy I was beginning to wonder how hard it might get trying to put $ to work! I'm about half way there to the goal already this year but it is real early of course.

Finding stuff like MPAA makes it much easier IMO.
Still way too early to be sure of anything of course but I think 2010 will be a great year for investors in MPAA.

It will likely be a top performer in the BTHB contest and VMIR too for the year. Heard it here first

I've been buying ever since Gilead mentioned it and doing more buying as I dug deeper (unfortunately at higher prices as it crept up). Did take me awhile to look at it more closely though darn it (missed loading up even more at lower levels).

Those are usually the 'easy' home runs, not big winners but very low risk and good upside IMO.
The ones where you go thru your checklist and go 'yep, yep, yep, nope, yep, yep, nope, yep, yep' etc. Where you dig and like it, dig more and like it, dig more and go "OK time to get to eating some of this stock up".

My daughter and I practiced the new cheer:

"M.P.A.A. YAY!" when it hit new highs this week LOL.

That is one thing I have on my checklist as reason to buy. Gotta keep the little one motivated to watch what I'm invetsing in. No better way than to make up a silly cheer.

"Let's go Mexco!"
"A New High for AYSI!"
"S.M.I.D. WEEEEEEEE!"
now "M.P.A.A. YAY!"

Never made one for E GMI because I didn't trust the way they had their balance sheet set up on the Levle 3s and how they seemed to always sell them for profits. doesn't mean anything's wrong- just means my sniffer couldn't sniff a smell I needed to smell so I mostly walked after a quick gain on that one, still have a little.

Just wish I had more time to jump into looking at companies quicker. It took me up until just last weekend to really start to feel like there was something real good here on MPAA when if I was on the ball I coulda done it in maybe two days without interruption and coulda loaded up cheaper.
Feel like I missed an easy 10%. But still an easy many % to go so that's why I am still buying a bit on the way up even on a horrific market day.

I don't like all the institutional ownership.
Those guys have tons of time and resources to figure stuff out and know what's going on before us little fish can. But oh well, nothing's perfect.

My guess is as the year progresses and they pay off the debt, some of the institutional owners that got burned a bit on the $12+ per share placement a couple years back will start to clammer for a share buyback.
I think this company will have a good shot at seeing double digits in 2010 if things stay on track.

That's another thing, I like companies like this where there's been heavy attrition to the share price over time so when the fundamentals turn up they often lag in price for a bit before punching thru to the upside again.

Look at the 5 year chart and you can see the pressure on this last couple years even though they should be continuing to report record shareholder equity. There's value in that. Especially when you look at their customer charts over the same timeframe. I think the placement shares at $12.20+ in 2007 have probably put artificial pressure on this the last couple years (if they've been selling but I haven't had time to look thru that specifically).

At any rate, I say this is easy money. I usually only find one or two of those a year. Hope that trend changes at some point...

Hope I don't get burnt this time LOL. I don't recall getting burned badly on a bigger bet yet so my bravado is high.

Humility is sure to follow... One of these days I'll get torched on a bigger bet. This is still kind of a medium bet tho for now.

Good luck to us, good to see you and Nelson onboard for the hopeful ride. I like both you guys' pix and style.