Q: Your thoughts on this company as an investment.
5i Research Answer:
TGH is a small-cap name that designs and manufactures hydro-vac trucks in North America, serving excavation service providers in the oil and gas sectors. In the last three years, TGH’s sales growth has been solid, above 50% in each of the last three years due to a favourable cyclical upturn in the industry. The balance sheet is strong, with a net debt of only $1M. TGH is generating record cash flow with limited needs for reinvestments. The consensus estimate is that TGH will continue to grow its revenue by double digits over the next few years. Overall, it is a very interesting name that is on solid momentum, but TGH is quite illiquid; investors need to get comfortable with the illiquidity and cyclicality of the industry.