Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, December 16th:DXP Enterprises (DXPE) : This leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, Mexico and Dubai, has a Zacks Rank #1(Strong Buy), and witnessed the Zacks Consensus Estimate for its current year earnings increasing 14.3% over the last 60 days.DXP Enterprises’ shares gained 52.1% over the la ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.While many investors like to look for moment ...

Steven Cress Background and Expertise - Steven Cress is the VP of Quantitative Strategy and Market Data at Seeking Alpha, responsible for creating the platform's quantitative stock rating system and analytical tools [1] - He is the Founder and Co-Manager of Alpha Picks, a systematic stock recommendation tool aimed at helping long-term investors build high-quality portfolios [1] - Cress has over 30 years of experience in equity research, quantitative strategies, and portfolio management, making him a seasoned expert in investment topics [4] Professional Achievements and Contributions - Cress founded CressCap Investment Research, which was acquired by Seeking Alpha in 2018 for its exceptional quantitative analysis and market data capabilities [3] - He previously founded Cress Capital Management, a quantitative hedge fund, and held leadership roles at Morgan Stanley and Northern Trust [3] - His work focuses on eliminating emotional biases in investment decisions through data-driven approaches and sophisticated algorithms [2] Tools and Systems Developed - Cress developed the Seeking Alpha Quant Rating system, which interprets data to provide investment insights and save time for users [1] - He created a daily updated grading system for stock trading recommendations, simplifying complex investment research [2]

Sales Performance - For the nine months ended September 30, 2024, DXP reported total sales of approximately $1,331.1 million, an increase of 4.7% compared to $1,271.6 million for the same period in 2023[89]. - Organic sales for the three months ended September 30, 2024, were $444.4 million, up 7.0% from $415.4 million in the same period of 2023[89]. - The Service Centers segment generated sales of $911.8 million for the nine months ended September 30, 2024, compared to $914.1 million in 2023, reflecting a slight decrease[89]. - The Innovative Pumping Solutions segment saw sales increase to $225.4 million for the nine months ended September 30, 2024, up from $158.4 million in 2023, representing a growth of 42.2%[89]. - The Supply Chain Services segment reported sales of approximately $193.9 million for the nine months ended September 30, 2024, a decrease of 2.6% compared to $199.0 million in 2023[97]. - Sales for the three months ended September 30, 2024, increased by $53.7 million, or 12.8%, to approximately $472.9 million from $419.2 million for the prior year's corresponding period[100]. - The Service Centers segment saw sales increase by $22.4 million, or 7.6%, primarily due to job timing and a recent acquisition contributing $13.0 million[101]. - The Innovative Pumping Solutions segment experienced a sales increase of $30.9 million, or 52.3%, driven by project-related work and $15.6 million from recent acquisitions[102]. - For the nine months ended September 30, 2024, sales increased by $59.6 million, or 4.7%, to approximately $1,331.1 million, with the Innovative Pumping Solutions segment contributing $67.0 million to this growth[108]. Profitability and Expenses - Gross profit for the three months ended September 30, 2024, was $146.1 million, resulting in a gross profit margin of 30.9%, compared to $125.6 million and 29.9% in the same period of 2023[89]. - Adjusted EBITDA for the three months ended September 30, 2024, was $52.4 million, with an adjusted EBITDA margin of 11.1%, compared to $44.0 million and 10.5% in the same period of 2023[89]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $141.0 million, up from $132.4 million in the prior year, reflecting a growth of approximately 6.4%[121]. - Selling, general and administrative expenses (SG&A) for the three months ended September 30, 2024, increased by $16.8 million, or 18.7%, to $106.5 million, mainly due to higher payroll and related expenses[104]. - SG&A for the nine months ended September 30, 2024, increased by approximately $28.0 million, or 10.2%, to $301.7 million, reflecting increased business activity[113]. - Operating income for the third quarter of 2024 increased by $3.8 million to $39.6 million, attributed to the increase in sales during the period[105]. Cash Flow and Liquidity - Free cash flow for the three months ended September 30, 2024, was $24.4 million, down from $38.3 million in the same period of 2023[89]. - The Company generated $70.1 million in cash from operating activities during the nine months ended September 30, 2024, compared to $63.8 million in the prior year, marking an increase of 3.9%[128]. - Free Cash Flow for the three months ended September 30, 2024, was $24.4 million, compared to $38.3 million in the same period of 2023, indicating a decrease of 36.3%[123]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $165.1 million, significantly higher than $16.0 million in the same period of 2023, primarily due to acquisition activity[130]. - The Company had available cash of $35.0 million and credit facility availability of $131.6 million as of September 30, 2024[125]. - The Company expects to maintain adequate funding and liquidity to meet normal working capital needs over the next twelve months[139]. Debt and Financial Ratios - Interest expense for the third quarter of 2024 rose by $3.0 million, primarily due to an additional $125.0 million borrowed on the Term Loan[106]. - The Fixed Charge Coverage Ratio as of September 30, 2024, was 1.72 to 1.00, indicating compliance with financial covenants[133]. - The Secured Leverage Ratio as of September 30, 2024, was 2.54 to 1.00, below the required threshold of 5.50 to 1.00[135]. Future Outlook - DXP anticipates consistent demand across all end markets moving forward, supported by price increases from vendors and acquisition activities[96]. - Recent acquisitions contributed approximately $40.5 million in sales within the water and wastewater markets for the nine months ended September 30, 2024[96]. - The Company plans to pursue additional acquisition targets, primarily funded through cash flows from operations and borrowings[138]. - The effective tax rate for the three months ended September 30, 2024, was 11.1%, a decrease from 26.3% in the prior year, influenced by research and development tax credits[107]. - The effective tax rate for the nine months ended September 30, 2024, was 21.1%, down from 26.8% in the prior year, also due to research and development tax credits[116]. - Net income attributable to DXP Enterprises, Inc. for the three months ended September 30, 2024, was $21.1 million, compared to $16.2 million for the same period in 2023, representing a 30% increase[121].

NEWS RELEASE CONTACT: Kent Yee Senior Vice President, CFO 713-996-4700 www.dxpe.com DXP ENTERPRISES, INC. REPORTS THIRD QUARTER 2024 RESULTS • $35.0 million in cash • $472.9 million in sales, a 6.1 percent sequential and 12.8 percent year-over-year increase • GAAP diluted EPS of $1.27 • $52.4 million in earnings before interest, taxes, depreciation & amortization and other non-cash charges ("Adjusted EBITDA") • Free Cash Flow of $24.4 million for the quarter, and $54.4 million for the nine months ended Sept ...

Financial Data and Key Metrics - Total sales for Q3 2024 increased by 12.8% year-over-year to $472.9 million, with adjusted EBITDA of $52.4 million, up 19.1% year-over-year [8][19] - Year-to-date sales through September 30 increased by 4.7%, with adjusted EBITDA up 6.5% [7] - Gross profit margins improved by 94 basis points to 30.9% in Q3 2024 compared to Q3 2023 [17] - Operating income margin was 8.4% in Q3 2024, a slight decline of 18 basis points compared to Q3 2023 [18] - Earnings per diluted share for Q3 2024 was $1.27, up from $0.93 in Q3 2023 [37] Business Segment Performance - **Innovative Pumping Solutions (IPS):** Sales grew 52.3% year-over-year to $89.8 million, driven by strong performance in energy and water-related projects [8][9] - **Service Centers:** Sales increased 7.6% year-over-year to $316.8 million, with operating income margins of 14.6% [8][19] - **Supply Chain Services (SCS):** Sales grew 0.7% year-over-year to $66.2 million, with operating income margins of 8.4% [8][19] - DXP Water now represents 45% of IPS sales, up from 31% in the previous year [9] Market Performance - Energy-related backlog grew 39.1% sequentially in Q3 2024, with significant project wins expected to impact revenue in Q1 or Q2 of 2025 [27] - Water and wastewater-related backlog also showed strong growth, driven by both organic and acquisition-related additions [28] - Regional growth was observed in North Central, North Texas, South Rockies, Southwest, and Canadian rotating equipment markets [13] Strategic Direction and Industry Competition - The company is focused on driving organic and acquisition growth, improving gross profit margins, and increasing productivity [6] - DXP is diversifying its business to reduce cyclicality, with a strong emphasis on water and wastewater projects, which now represent a significant portion of IPS sales [9][10] - The company has closed seven acquisitions year-to-date, with plans to close at least two more by the end of Q1 2025 [44] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about the future, citing strong demand in end markets and a robust acquisition pipeline [6][20] - The company expects to maintain double-digit EBITDA margins and continue growing sales above market rates [20][22] - DXP is investing in technology and processes to improve efficiency and support long-term growth [17] Other Important Information - The company has remediated all material weaknesses in its financial controls as of Q3 2024 [45] - DXP repurchased $5 million worth of shares in Q3 and has a new $85 million share repurchase program in place [44] - Free cash flow for Q3 was $24.4 million, down from $38.3 million in Q3 2023, primarily due to investments in project work [41] Q&A Session Summary Question: Acquisition Pipeline and Recent Deals - The company closed five acquisitions by the end of Q3 and two more in October, bringing the total to seven year-to-date [47] - Two additional acquisitions are expected to close by the end of Q1 2025 [47] - Recent acquisitions include a water wastewater business in Nebraska and a vacuum pump business in California [48] Question: Q4 Revenue Expectations - Management expects Q4 revenue to be softer historically, with fewer billing days due to holidays [51] - Sales per business day trend shows variability, with September reaching $8.77 million per day, but October dropping to $6.99 million per day [50] Question: EBITDA Margins and Operating Tailwinds - Adjusted EBITDA margins are expected to remain in the double digits, supported by growth in water and wastewater projects and accretive acquisitions [55] - SG&A expenses are expected to remain elevated as the company invests in growth initiatives [55] Question: Debt Refinancing and Interest Expense - The company reduced borrowing costs by 100 basis points in October, with run-rate interest expense expected to remain around $15.5 million to $16 million per quarter [57] Question: Portfolio Diversification and Potential Divestitures - Management is open to divesting parts of the portfolio that no longer align with the company's strategic direction, though no immediate plans are in place [60][62] Question: Capital Allocation and Seller Expectations - Seller valuations remain reasonable, and the company continues to focus on strategic acquisitions that align with its growth objectives [58]

Core Viewpoint - The focus on cash flow rather than just profits is essential for assessing a company's financial health and potential for growth in the current economic environment [1][2][3]. Group 1: Importance of Cash Flow - Cash is crucial for a company's existence, development, and success, serving as a measure of resiliency [2]. - Positive cash flow indicates an increase in liquid assets, enabling a company to meet obligations, reinvest, and endure downturns [4]. - A company must not only have positive cash flow but also increasing cash flow to ensure future growth and reduce dependency on external financing [5]. Group 2: Screening Parameters for Stocks - Stocks were screened for those whose cash flow in the latest quarter was at least equal to or greater than the 5-year average cash flow per common share, indicating a positive trend [6]. - Additional criteria included a Zacks Rank of 1 (Strong Buy), an average broker rating of 1, a current price of at least $5, and a VGM Score of B or better [7]. Group 3: Selected Stocks - Limbach Holdings, Inc. (LMB) provides building systems and has seen a 2.5% upward revision in the 2024 earnings estimate [8]. - DXP Enterprises, Inc. (DXPE) offers innovative pumping solutions and has had a 12.7% upward revision in current-year earnings [9]. - Lands' End, Inc. (LE) operates as a multi-channel retailer with a 23.3% increase in fiscal 2025 earnings estimates [10]. - Euroseas Ltd. (ESEA) operates in the shipping market and has experienced a 13.7% upward revision in current-year earnings [11].

In the latest market close, DXP Enterprises (DXPE) reached $49.40, with a +0.06% movement compared to the previous day. The stock's performance was behind the S&P 500's daily gain of 0.16%. Meanwhile, the Dow experienced a drop of 0.37%, and the technology-dominated Nasdaq saw an increase of 0.78%. Shares of the industrial products supplier witnessed a loss of 7.48% over the previous month, trailing the performance of the Industrial Products sector with its loss of 0.89% and the S&P 500's gain of 1.67%. The ...

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks in various market conditions, utilizing valuation metrics to uncover potential opportunities [1][2]. Company Summary: DXP Enterprises (DXPE) - DXP Enterprises currently holds a Zacks Rank of 1 (Strong Buy) and an A grade for Value, indicating strong potential for value investors [3]. - The stock has a Forward P/E ratio of 14.45, significantly lower than the industry average of 22.24, with a historical range between 7.02 and 17.28 over the past 52 weeks [3]. - The P/B ratio for DXPE is 2.25, which is attractive compared to the industry average of 5.50, with a historical range of 1.32 to 2.40 [4]. - DXPE's P/CF ratio stands at 9.56, also favorable against the industry average of 21.95, with a historical range of 5.18 to 9.92 [5]. - Overall, the metrics suggest that DXP Enterprises is likely undervalued, making it one of the strongest value stocks in the market [6].

In the latest trading session, DXP Enterprises (DXPE) closed at $54.86, marking a +0.31% move from the previous day. This move lagged the S&P 500's daily gain of 0.77%. Elsewhere, the Dow saw an upswing of 0.47%, while the tech-heavy Nasdaq appreciated by 0.87%. The industrial products supplier's shares have seen an increase of 9.62% over the last month, surpassing the Industrial Products sector's gain of 8.52% and the S&P 500's gain of 4.87%. Investors will be eagerly watching for the performance of DXP En ...