Is Miller Industries (MLR) a Smart Long-Term Buy?

Palm Valley Capital Management, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. Two-thirds of the non-financial members in the Russell 2000 Index are either unprofitable or trade above 20x EV/EBIT. The median EBIT growth since 2019 for small caps in the sub 10x EV/EBIT bucket is an astonishing 194%. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q2 2022 investor letter, Palm Valley Capital Fund mentioned Miller Industries, Inc. (NYSE:MLR) and explained its insights for the company. Founded in 1990, Miller Industries, Inc. (NYSE:MLR) is an Ooltewah, Tennessee-based tow truck and towing equipment manufacturing company with a $260.5 billion market capitalization. Miller Industries, Inc. (NYSE:MLR) delivered a -31.68% return since the beginning of the year, while its 12-month returns are down by -39.52%. The stock closed at $22.82 per share on July 15, 2022.

Here is what Palm Valley Capital Fund has to say about Miller Industries, Inc. (NYSE:MLR) in its Q2 2022 investor letter:

“We started buying Miller last quarter. Its stock has slid consistently for more than a year and now sits beneath its pandemic lows. The tow truck manufacturer’s sales and backlog are strong, but inflation has crimped earnings. Management said supply chain challenges are decreasing in 2022, and they believe it is possible for margins to approach normalized levels by the end of the year. The stock is trading for around 6x our estimate of normalized operating profit and below Miller’s tangible book value.”

Photo by Andrew Valdivia on Unsplash

Our calculations show that Miller Industries, Inc. (NYSE:MLR) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Miller Industries, Inc. (NYSE:MLR) was in 12 hedge fund portfolios at the end of the second quarter of 2022, compared to 11 funds in the previous quarter. Miller Industries, Inc. (NYSE:MLR) delivered a -15.79% return in the past 3 months.

In April 2022, we also shared another hedge fund’s views on Miller Industries, Inc. (NYSE:MLR) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.