SwingTrade Member Forum

[MikeDDKing]

TPCS is one of my favorite stocks and is a rapidly growing metal fabricator. Here are some reasons why I like TPCS:

1. Strong Current Earnings - Ignoring one-time items they made $0.05/share in fiscal Q2'11 ending September 30, 2010. With a price of $1.15/share they are trading at a low multiple of those earnings.

2. Backlog - TPCS's backlog has been rapidly increasing over the past several quarters and has increased significantly since the end of fiscal Q2'11 (Sept). At quarter end they had $26.4M in backlog. They have added orders of $9.6M since the end of the quarter and there are still three weeks remaining in fiscal Q3'11 (Dec). I suspect the book/bill ratio for fiscal Q3'11 will again be over one as it was in fiscal Q2'11 (Sept). Earlier in the quarter the backlog was roughly 4 times the revenue for fiscal Q2'11.

3. New Chinese Operations - The CC discussion about the new Chinese facility was quite interesting. As I understand things there were multiple reasons for opening this facility. To begin with, solar is heavily being built in China and there is customer demand for TPCS product to be built there. Also, this will reduce cost for TPCS but pricing pressure may offset this savings. Overall, this seems like a very wise move from the point of view of TPCS's solar business. Additionally, they are close to capacity limits in the US. It sounds like they expect a big portion of the solar business to shift to China while capacity in the US will be used up for other products. So, this move seems to indicate future increases in revenue as compared to fiscal Q2'11. In specific they stated: "We are expecting some very good things over the next 12 months from these combined operations."

4. Long Term Growth Initiatives - They have several large growth initiatives that could substantially increase revenue in the long term. These include a new tier 1 clean tech customer in the gas generation area and Still River Systems for medical. While these will provide some revenue in the near term they probably will not provide large revenue until calendar 2012-2013. They are also branching out further in the solar and nuclear areas.

5. Easy Fiscal Q3 Comparison - The comp for the next quarter is quite easy as fiscal Q3'10 revenue was only $5.3M with diluted EPS of $0.01. They should easily beat that.

6. Strong Balance Sheet - Their balance sheet is quite strong and includes a huge amount of cash.