Replies to post #272797 on SwingTrade Member Forum (SWING)

[Trent Blair]

I'm long on XPLT too. Good financials and pretty much a monopoly.

[gistheman]

wise

[FrankLind]

Welcome aboard Mike.
This is my largest position.

[MikeDDKing]

XPEL Technologies (DAP-U.V / XPLT) is a rapidly growing provider of automotive paint protection film that I think has potential to be a multi-bagger from the current price. Below is a summary of my thesis:

1. XPEL has had massive growth over many years. Below is the history of revenue and EPS:

Year    Revenue      EPS   
 2014  $29,630,179   $0.12 
 2013  $17,898,812   $0.05 
 2012  $10,670,838   $0.05 
 2011   $6,041,853   $0.03 
 2010   $4,129,964   $0.02 
 2009   $3,834,565  -$0.02 (EPS was $0.01 from continuing operations)

2. Management is guiding for continued revenue growth. In Q1'15 which is a seasonally weak quarter, revenue grew 54% YOY to $8,133,932. EPS grew 44% to $0.026 ($0.028 ignoring one-time acquisition expenses). Furthermore, in the Q1'15 conference call (http://www.investorcalendar.com/event/174049#), the company guided for 50%+ revenue growth in Q2'15 and beyond. In Q2'14 they had revenue of $8,348,309 and EPS of $0.023/share. That would mean that revenue would be roughly $12.5M and I estimate EPS of roughly $0.04-$0.05/share. The statements from the conference call describing growth are:

"Overall we think that at the size of where we are, if we can drive revenue growth, year over year, in excess of 50%, we think that's a great growth rate, and so we're very pleased with that number." and

"We know those are big comps and 50% growth on second quarter of last year is a big number, but that's what we're gearing for. And if we can maintain at that 50% number we're going to be very excited about that, and in excess of that is just a bonus."

3. They expect a slower increase in SG&A going forward and presumably improved operating leverage. They had been adding staff to catch up and now are at a point where they are just planning for the future.

4. They have significant room for growth. Industry market penetration for paint protection from new US car sales is only around 4% and I believe is a growing industry. They also are expanding internationally in the paint protection business and expanding into window film.

5. Their software gives them an edge as reportedly it gives them better patterns than the competition which translates into an easier installation process.

6. I think highly of management and have met the CEO several times in the past.

You can learn a lot more about XPEL by reading their web site which is located here: http://www.xpel.com/

Disclosure: I'm long XPLT / DAP-U.V.