Manufacturing and "made in America" is back with small cap Omega Flex, Inc (NASDAQ: OFLX) being one stock that's clearly leading the way on the technical charts:
A longer term chart also shows shares taking off a few years ago as the economy finally started to recover and then again (albeit with a few dips) once the Trump presidency along with his trade war against China got going:
Since 1975 and with over 200 patents registered worldwide, small cap Omega Flex has supplied proprietary products (engineered flexible metal piping) for a broad number of applications and markets (industrial, residential and commercial), which include primary steel production, fuel-handling, semi-conductor, medical, pharmaceutical, petrochemical, residential and commercial construction and power generation. The Company's primary product, flexible gas piping, is used for gas piping within residential and commercial buildings. Through its flexibility and ease of use, the Company's TracPipe® and TracPipe® CounterStrike® flexible gas piping, along with its fittings distributed under the trademarks AutoSnap® and AutoFlare®, allows users to substantially cut the time required to install gas piping, as compared to traditional methods. These products are manufactured in Exton, Pennsylvania facilities in the United States, and in Banbury, Oxfordshire in the United Kingdom.
In other words, Omega Flex is not in a particular "sexy" line of products or business. However and because of its simple and ubiquitous nature, flexible metal hose can be applied and has been applied to a number of different applications across a broad range of industries. Moreover, the flexible metal hose industry is highly fragmented and diverse, with over 10 companies producing flexible metal hose in the United States, and at least that many in Europe and Asia. And while none of these competitors appear to be dominant in more than one market, Omega Flex is the leading supplier of flexible metal hose in each of the markets in which the Company participates.
Omega Flex also does not report much news and when it does, it tends to be filings about earnings. In early February, Omega Flex reported that Q4 net sales were 5.1% higher while net sales for the twelve months ended December 31 increased 6.4% to $108,313,000 and net income increased 28.6% to $20,139,000. The final quarter of last year included a one-time charge related to the enactment of the Tax Cuts and Jobs Act in December 2017.
In the annual report filed early last year for 2017, the CEO had commented:
It was in 2007 that the tremors of the great recession began to shake the foundations of our business, and that descent was lowest in 2009 when our net sales for the year were $44,140,000, and our net income was $4,381,000. In contrast, in 2017, our net sales have climbed to $101,799,000 and our net income was $15,622,000. In the intervening years, we have recovered and prospered so that we now have twice the sales and three times the net income achieved at our lowest point in the recession.
And had noted a new product line:
This year, we announced the commercialization of MediTrac®, our newest product line for corrugated medical tubing for distribution of medical gases in hospitals, ambulatory care centers, clinics, and laboratories. MediTrac is made from a copper alloy and sold in long continuous lengths. With its inherent flexibility, it can be installed much quicker than rigid copper tubing, with its numerous brazed joints, tees and elbows. MediTrac provides the same durability of traditional rigid copper tubing while offering increased safety and efficiency because of decreased risk of contamination and potential damage from seismic events, as well as ability to be installed in new or retrofitted buildings without any brazing or hot work.
In the annual report for 2016 filed in 2017, the CEO had this to say:
The year 2016 was one in which the world held its breath. From the presidential elections in the United States and the referendum in Great Britain on its continued membership in the European Union, there was tremendous uncertainty over the direction that events would follow. The results for OmegaFlex in 2016 were somewhat a reflection of those times. While we had record sales in 2016, those results were barely above the levels we achieved the year before. Likewise, the company had strong earnings, but those earnings were diminished by the effects of exchange rates at our English subsidiary and higher administrative and legal costs.
In 2017 and for better or worse, we have the answers to the questions posed in 2016. So far, result have been quite good with significant growth in net sales and net income in the first quarter of 2017, driven in part by a strong housing market and gains in market share.
So again, Omega Flex is not be in the sexist of product lines or businesses; but its share performance could be a good barometer or bet on American manufacturing as well as where the industries it supplies or the overall economy itself is heading.
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