Blount International (BLT) and Titan International (TWI) are benefiting from the global mechanization of farming in emerging markets, leading Lawrence T. De Maria, Co-Group Head of Global Industrial Infrastructure at William Blair & Company, L.L.C., to give these companies an “outperform” rating.
“The global mechanization in emerging markets to increase production on farms has become a significant change. Farms in emerging markets have had to become more efficient, more productive, as the world consumes more food and uses more biofuels. That is the major global theme that is happening over time,” De Maria said.
De Maria says Blount has a recurring and stable revenue stream and BLT‘s saw chains are an interesting and underfollowed story. “It has a very recurring and stable revenue stream,” he added. “Because the business is very stable, the company can reallocate resources into adjacent markets to accelerate its growth, and thus we think that in a moderate organic growth environment, the company can achieve solid double-digits earnings growth over the next few years.”
He also expects Titan International to outperform with its manufacturing of wheels and tires for farm, construction and mining equipment. “[TWI] is currently consolidating the global farm tire business for agriculture and is expanding further into mining. So in agriculture, Titan has gone from a U.S. business to a U.S. and South American business, and is now entering Europe through consolidation,” he said.
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