Preformed Line Products
Investment Thesis: Preformed Line Products offers a diversified investment into the electrical equipment industry through a smattering of products involved in electricity distribution through power lines and substations, mounting for solar panels, and telecoms technology involved tangentially to fiber optic cables. Its fibre optic closures offer growth potential with the company’s constant innovation and the continued rollout of 5G. Decreasing costs in solar energy installations also serve as a potential growth for the company. Its offerings in electrical distribution also serve as a growth opportunity due to the rising demand in the US to revamp electrical substations and transmission wires across the country.
Investment Merits: Merits include the company’s a large array of of diverse offerings in many industries, synergistic and strategic acquisitions that have been occurring throughout 2019 that have allowed the company to enter new markets, growth in solar energy demand that the company has been rising up to meet.
Investment Risks: Like all companies, PLPC runs the risk of its current technologies being made obsolete by new inventions in fast growing fields like 5G fibre optics. It also runs the risk of lower margins due to rising material costs and must face the burden of being constantly innovative in fast paced and globally competitive industry like the electrical distribution technology sphere.
Investment Catalysts: PLPC’s small cap provides the room for potentially large upsides due to technological developments or growth in capabilities. Despite its small size it is still a fairly large player in the market and has enjoyed relatively stable demand throughout 2020 due to backlog orders which it was able to meet.