Unofficially, summer is over with Labor Day. While walking Peach, my chubby, blonde lab mix, squirrels were busy getting ready for the winter. They, too, know playtime in the sun, dashing between oncoming cars is coming to a close.
Vacation is over and it’s time to get back to work.
Insiders did just that last week, buying stocks in bunches. As our regular readers know, some of our favorite angles are when executives are on the right side of the trade or act out of character i.e. buying when they predominantly sell.
Douglas Dynamics, Inc. (PLOW) offers both.
Douglas Dynamics is North America’s premier manufacturer and up-fitter of commercial work truck attachments and equipment. Its portfolio of products and services is separated into two segments: First, the Work Truck Attachments segment, which includes commercial snow and ice control equipment sold under the FISHER, SNOWEX, and WESTERN brands. Second, the Work Truck Solutions segment, which includes the up-fit of market leading attachments and storage solutions under the HENDERSON brand, and the DEJANA brand and its related sub-brands.
Perhaps, like squirrels, PLOW insiders, President and Chief Executive Officer (CEO) Robert McCormick and Director James Janik are preparing for winter. Both acted out of character by purchasing PLOW shares as they normally sell, sell, and sell some more.
Since 2010, CEO McCormick sold 30 times for more than $5 million while buying twice for a total of $344,235. The first buy was in May 2010, 3,300 shares at $11.25 for $37,125. Our guess is that it was options related as he sold 16,910 shares at $10.49, collecting $177,386 the same day. There were 29 uninterrupted sells until the President bought 10,000 shares at $30.71, investing $307,110 on September 9, 2023. (1)
Director Janik’s record is similar, he sold 36 times for more than $17 million in stock since May 2010. The wave of red sell tickets was disrupted with a 10,000 share buy in November 2016 at $25.95. He returned to selling in August 2017 at $35.03. His more recent buy was 10,000 shares on August 5, 2023, at $26.99. (2)
Wall Street appears to think the PLOW insiders’ rare buys have a good chance to be on the right side of the trade with a one-year price target of $44.00. (3) Currently, the stock trades at $31.47, meaning the stock has potential upside to target of 38.82 percent. Add in the current annual dividend of $1.18 per share (3.84 percent) and the potential total return tops 40 percent.
To hit $44, Douglas Dynamics would need to trade at 18.18 times (P/E) next year’s consensus earnings estimate of $2.42, which is considerably higher than this year’s forecast of $1.73. (4) As we type, the consumer cyclicals company’s P/E is 21.16. (5) There could be some upside to Wall Street’s price target if PLOW holds today’s valuation.
OVERALL: Douglas Dynamics, Inc. (PLOW) could offer an attractive combination of growth and income for shareholders if it meets Wall Street’s expectations. With a beta of 1.02, PLOW is appropriate for investors with average risk tolerance and time horizon of at least 18 months.
Rich Meyers
1 – https://www.secform4.com/insider-trading/1489528.htm
2 – https://www.secform4.com/insider-trading/1489527.htm
3 – https://finance.yahoo.com/quote/PLOW?p=PLOW&.tsrc=fin-srch
4 – https://finance.yahoo.com/quote/PLOW/analysis?p=PLOW
5 – https://finance.yahoo.com/quote/PLOW/key-statistics?p=PLOW