MCCOY CORP. $6.25 - Toronto symbol MCB

MCCOY CORP. $6.25 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.8 million; Market cap: $167.6 million; Dividend yield: 3.2%) operates through two divisions: Mobile Solutions and Energy Products and Services.

Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs are large wrench-like tools that tighten and loosen the pipe in the drill hole.

Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.

In the three months ended June 30, 2013, McCoy’s revenue rose 3.1%, to $42.4 million from $41.1 million a year earlier. Higher sales at Energy Products and Services offset declines at Mobile Solutions.

Earnings rose 43.4%, to $3.1 million, or $0.11 a share, from $2.1 million, or $0.08. The Energy Products and Services division’s sales increase lifted its profits, which made up for lower Mobile Solutions earnings.

As well, McCoy has cut costs at Mobile Solutions in response to its sales decline. The company laid off 25% of this business’s workforce in October 2012 and a further 15% earlier this year. The resulting savings also fuelled the big earnings jump.

Meanwhile, McCoy’s balance sheet is sound, with cash of $18.9 million, or $0.71 a share. The company’s long-term debt of $8.5 million is a low 5.1% of its market cap.

The stock trades at 13.0 times McCoy’s forecast 2013 earnings of $0.48 a share. It yields 3.2%.

McCoy is a buy for aggressive investors.

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