Gentherm: Thermal Profits

05/08/2014 7:00 am EST

Focus: STOCKS

Tom Bishop

Founder, BI Research

One of our recommended stocks now holds the Number One position on the elite Investor’s Business Daily 50 list, observes small-cap expert Tom Bishop, editor of BI Research.

Investor’s Business Daily assigns the shares of Gentherm (THRM) a 99 composite rating, 99 for relative EPS strength and 98 for relative strength, A- for Accumulation/Distribution and an ROE of 23%.

Gentherm is a global developer and marketer of innovative thermal management technologies for a broad range of heating and cooling, and temperature control applications.

Automotive products include climate controlled seating, whereby car seats may be heated with resistance heating elements or with warmed air ventilation.

Other automotive interior temperature controlled systems include heated steering wheels, armrests, cup holders, and other components. It also makes cable systems to connect various electricity uses throughout vehicles, back to the battery and other electronic devices.

The company has been making a bigger push on its line of dual-controlled heated and cooled mattress systems (partnering with a mattress manufacturer, of course).

In March, De Ruccie Bedding, with more than 1,400 stores in Asia, and Xilinmen Furniture (which makes roughly a million mattresses a year) both announced a new line of mattresses incorporating Gentherm’s Climate Control Sleep System.

Sofas and office chairs with this technology were also introduced. This high-end concept (these beds go for $3-4,000), is currently less than 1% of sales, but may soon start to register in its financial results.

Gentherm also announced the acquisition of Global Thermoelectric, which is the world leader in thermal generator systems (with no moving parts!) and remote power generation used to supply electrical power to remote (and usually unmanned) oil and gas, telecom, security, and military locations.

Global Thermoelectric has $34 million in sales and its power systems have been installed in over 25,000 locations worldwide. This, of course, dovetails with Gentherm’s interest in converting exhaust heat to electricity in vehicles.

Analysts are looking for 21% growth in Q1 EPS to $.29 and $1.39 (up $0.17 since last time) for the year. Our proprietary BI Research Rank calls this stock a Buy.

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