Shares of Myers Industries Inc. (MYE - Snapshot Report) reached a new 52-week high of $23.64 yesterday and closed the trading session at $23.36. The momentum in the stock price over the past few days is assumed to be driven by the recently released U.S. economic reports relating to the company’s operational areas, primarily automobile and retail. Additionally, the stock gained impetus from positive economic data on non-farm unemployment rate and consumer credit.
The newly released data regarding unemployment rate shows an improvement in total non-farm payroll jobs. However, the unemployment rate remains flat at 6.7% due to a rise in the number of people entering the labor force. Meanwhile, the construction sector showed an additional 19,000 jobs over the month, following an 18,000 increase in February. The scenario in the construction sector received favorable response as it suggested harsh winter weather conditions had created a lesser-than-expected impact on jobs.
Furthermore, consumer credit increased by $16.5 billion in February from the previous month’s figure of $13.8 billion. Consumer credit is considered a good indicator of spending levels in the future.
Moreover, investors are buoyed by encouraging economic data on retail sales released on Apr 14. The U.S. Department of Commerce reported that seasonally adjusted sales of retail and food services rose 1.1% in March, the highest increase since Sep 2012. This rise in retail sales in March was above the consensus forecast of a rise of 0.8%. The gain was led by increase in demand for auto sales. Sales of motor vehicles rose 3.1%, the highest since Sep 2012. Excluding motor vehicles sales, retail sales increased 0.7%.
The economic reports for March have confirmed that on the whole, the U.S. economy has started to come out of the winter freeze. Though the magnitude and pace of the rebound in activity levels has been somewhat weak, there has been notable improvement in the March data relative to what occurred in the first two months of the year.
Myers Industries is an international manufacturer of polymer products for industrial, agricultural, automotive, commercial and consumer markets. The company is also the largest wholesale distributor of tools, equipment and supplies for the tire service and undervehicle repair industry in the United States. Therefore, we believe that the company will certainly benefit from improvement in the U.S. economy.
We also consider the stock to have enough upside potential as it currently trades at a forward P/E of 19.5x, which is significantly lower than the peer group average of 37.4x. Moreover, the company’s Return on Equity (ROE), Return on Asset (ROA) and Return on Capital (ROC) are much higher than the peer group average.
Furthermore, we are impressed with Myers Industries’ initiatives such as product launches, material substitutions, removal of low-margin operations and restructuring of the Lawn and Garden Segment to boost the top and bottom lines.
Though the company’s prospects looks positive, it currently carries a Zacks Rank #4 (Sell) due to lower-than-expected earnings for fourth-quarter 2013. Nevertheless, we see chances of an improvement in the Zacks Rank in the future, as the above-mentioned positive economic factors will be reflected in the company’s upcoming results.
Apart from Myers Industries, AGL Resources Inc. , Atmos Energy Corp. (ATO - Snapshot Report) and Athlon Energy Inc. achieved new 52-week highs of$51.63, $50.18 and $40.25 respectively, on Apr 15, 2014.
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