Updated Thoughts on Flyover Stock Companies
Some of the seven companies profiled in the first six months of Flyover Stocks have been active with M&A deals, announcing new business lines, and posting record financial results.
As much as I enjoy profiling new companies, as I discussed in “Look at Your Fish,” we can gain valuable insights examining existing ideas.
So today I’ll share some updated thoughts on seven companies previously profiled here at Flyover Stocks.
Worthington Enterprises
Since the spin-off in December, Worthington Enterprises acquired HALO Products - an outdoor pizza oven and grill company.
While terms of the deal weren’t disclosed, HALO generated $7 million in revenue in 2023. I like the strategy given the natural links between the acquired products and Worthington’s existing propane tank offerings.
HALO pizza ovens are portable and have positive online reviews. Being the guy at the tailgate with the portable pizza oven would make you very popular, indeed.
It’s unclear what cross-selling opportunities might come from the deal, if any, but Worthington’s existing retailer relationships should help accelerate HALO’s growth.
In a recent investor presentation, CEO Andy Rose mentioned Worthington Enterprises' goal of improving ROIC in the coming years. The pre-spin Worthington executive bonuses were partially based on economic value added (EVA) metrics, and I’m hoping to see another ROIC-based metric at Worthington Enterprises when the first proxy statement is published.
Howdens Joinery plc
Howdens recently announced it is expanding its offerings to include fitted bedrooms in addition to kitchens, an adjacency I had yet to consider but makes a lot of sense.
Much of the work that's done in kitchens - cabinetry, shelving, etc. - is also found in bedrooms like the one shown below. This expansion won't require Howdens to make material changes to its model, increases revenue per depot, and provides its trade professional customers more touch points with the company and with their own customers.
Good things tend to happen at good companies, and this is an example of that. Companies focused on delighting customers find ways to deliver value in ways you had yet to consider. Put differently, exceptional businesses have embedded optionality that the market usually underestimates.
Howdens’ mission is to provide great service to its trade professional customers. Having its physical network of convenient depot locations provides Howdens opportunities to further delight those customers by layering on additional offerings.