GEO Investing

After a nice ride with XPEL Technologies (OOTC:XPLT), GeoInvesting decided to close out its long position in XPLT due to its second quarter 2015 conference call commentary not included in the associated press release.  The company is engaged in manufacturing and distributing after-market automotive products, and focuses on the aftermarket for automotive paint, window tint products and headlight protection products, which it serves through its offerings of bulk paint protection film (PPF), pre-cut PPF and headlight protection kits. 

We first disclosed our long position in XPLT on January 18, 2013 when the stock was trading at $0.29.  The stock became a multi-bagger for our portfolio.  It was our belief that the stock’s strength could continue when we coded it a GeoBargain on October 3, 2015 at $3.00. Shares hit a recent high of $3.99 on August 17, 2015 before retracing to current levels.   Yesterday, XPLT reported Q2 2015 results:

  • Sales of $11.3 million vs $8.3 million in the prior year period
  • EPS of $0.02 vs $0.02 in the prior year

While sales growth remained strong for the quarter (largely aided by a recent acquisition), concerns from the conference call indicated that the company is facing headwinds for the first time since we went long. After listening in on the call, it seems that several factors will continue to negatively affect growth going forward:

  • Foreign currency weakening vs the U.S dollar is negatively impacting net income.
  • Reorganization of distribution network China reduced growth.
  • A weakened Canadian economy is expected to add pressure on Canadian sales.  

We will continue to actively track XPLT to determine if and when to reestablish a long position. 

GeoInvesting is committed to identifying other stocks multi-bagger potential and has several ideas in the pipeline that we will be publishing at our portal in the near future.

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