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Anatomy of Success: Malibu Boats (MBUU)

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The proven Zacks Rank is great method for both beginning and experienced investors to identify the strongest stocks to buy. The model, which emphasizes earnings estimates and estimate revisions, discovers companies of all shapes and sizes that are displaying the right characteristics to beat the market.

When a stock earns the coveted Zacks Rank #1 (Strong Buy), it is poised to provide superior returns over the next one to three months. Of course, achieving this ideal rank is no easy task. Of the thousands of companies tracked by Zacks, only about 5% earn this designation.

In the story below, you will learn about one particular company that helped show the strength of the Zacks Rank. If investors had followed our ranking system when it flagged this manufacturer of recreational boats, they would have witnessed massive profits.

Malibu Boats, Inc. (MBUU - Free Report)

Malibu Boats designs and builds sports boats. The company sells its boats under two brands: Malibu and Axis Wake Research. Malibu is the world’s largest manufacturer of watersports towboats, but its watercraft are also used for general recreational boating.

MBUU has made a number of appearances on the Zacks Rank #1 (Strong Buy) list over the past year, starting with its first designation on June 30, 2017. The stock only stayed only the top-rank list for one week, but that was enough to inspire strong momentum—which was met with improving analyst sentiment and solid financial results from the company.

Malibu Boats earned a Zacks Rank #1 (Strong Buy) again on August 11. At the time, analysts were likely getting excited about the boat maker’s upcoming earnings report, which was released just over three weeks later. Malibu certainly lived up to this bullishness, posting better-than-expected earnings and in-live revenue. In this report, the company also notched earnings growth of 13.2% and revenue growth of 11.9%.

MBUU continued picking up pace, never dipping below a Zacks Rank #3 (Hold) until it reached #1 (Strong Buy) for the third time on September 22. By this time, the stock had already gained about 15.1% since it first earned our top mark in June. MBUU would maintain this third #1 (Strong Buy) for six consecutive weeks.

Malibu would once again earn a Zacks Rank #1 (Strong Buy) on November 10, just four days after the company crushed expectations with its latest earnings report. Management posted earnings of 42 cents per share, handily beating the Zacks Consensus Estimate of 32 cents and improving 61.5% year over year. Meanwhile, net sales were up 6.1% to $104 million, which beat our consensus estimate of $98 million.

The below chart demonstrates the price performance for MBUU and 12-month forward EPS estimate (in red), starting from the time the stock first earned a Zacks Rank #1 (Strong Buy).

As we can see, MBUU was a huge winner for those that followed the Zacks Rank. The stock is currently up more than 35.6% since earning a Zacks Rank #1 (Strong Buy) last year. Investors should know that our model is the simplest way to identify elite stocks poised to beat the market on a consistent basis.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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