Shares of Uni-Select (TSE:UNS) have grown nearly 100% over the past 12 months, and the stock may have more steam left in it. Here’s what makes UNS the hottest stock this week.
Uni-Select Has an Extensive Presence
UNS distributes automotive refinish and industrial coatings in North America. Its unit of automotive aftermarket parts caters to Canada and the U.K. Founded in 1968, the company has 14 distribution centers and more than 400 stores.
UNS’ U.S. subsidiary, Finishmaster, operates its namesake brand and serves over 30,000 customers every year. Its U.K. subsidiary, GSF Car Parts, caters to more than 20,000 customers at its 180 stores. In the U.S. the company’s shares are traded over-the-counter under the ticker (UNIEF).
Accelerating Fundamentals
Revenues of the company have increased from $1.47 billion in 2020 to $1.61 billion in 2021. During this period, UNS posted an impressive turnaround — from a net loss per share of $0.74 in 2020 to a net profit per share of $0.02 in 2021.
Importantly, this operational performance has continued with the company’s 10.8% organic growth in the recent second quarter, aided by price increases.
Further, its adjusted EBITDA increased 11.5% over the prior year to $51.3 million in the second quarter of 2022. Moreover, better margins and lower interest payments have helped cash flow generation remain robust. The total net debt to adjusted EBITDA multiple for UNS was 1.7 in the recent quarter, compared to 2.8 in the year-ago period.
The top line of the company is expected to rise to $1.73 billion in 2022.
Additionally, while supply chain bottlenecks and rising costs remain a challenge, UNS is focused on organic growth, making operational gains, and reinvesting for growth.
Earlier this year, the company expanded its footprint in Ontario, with the acquisition of Maslack Supply Ltd. This strategic move added 13 locations to UNS’ portfolio.
Street Sees More Upside in UNS Stock
Last Month, TD Securities analyst Daryl Young reiterated a Buy rating on the stock while increasing the price target to C$44 from C$43.
Overall, the Street has a Strong Buy consensus rating on UNS with an average price target of C$43.90. This indicates 19.23% potential upside. Additionally, a TipRanks Smart Score of “Perfect 10” means the stock is likely to outperform the broader market.
What’s more, insiders seem to be bullish on UNS and have bought the company’s shares worth C$1.1 million in the past three months. This implies a very positive insider confidence signal for UNS.
Closing Thoughts
At current levels, UNS shares are not exactly cheap, owing to a price-to-earnings multiple of 24.7. Nonetheless, this turnaround stock deserves investors’ attention due to its focus on organic growth and efforts to expand its footprint significantly.
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