Thursday, February 22, 2018

A current AIM Program Small Cap Equity Holding: Malibu Boats, Inc. (MBUU) by: Riddhi Vakil. "Boat's a Buy"

Malibu Boats, Inc. (MBUU, $30.77): “Boat’s a Buy”
By: Riddhi Vakil, AIM student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


Malibu Boats, Inc. (NASDAQ: MBUU) designs, manufactures, and markets performance sport boats for water sports, such water skiing, wakeboarding, and wake surfing, as well as having options for recreational boating. Founded on November 1, 2013, it is headquartered in Loudon, Tn.

•In the last couple of days, they have increased their trading volume which is seen to many investors as a bullish move. This adds more stability and support for price advances.

•Acquisition of Cobalt earlier has shown to significantly greater than they expected in terms of financial performance.

•The retail industry has supported the growth for MBUU as there is in increase in consumer confidence.

•Although there has been great performance for them domestically, they have had trouble in international markets.

•MBUU’s market share has remained steady and they remain to be a leader in performance sport boats with Cobalt increasing their share in this as well.

Key points: The acquisition of Cobalt has allowed them to hold the number one market share position in the US under the sterndrive category, allowing them to be in the “buy” position under many investor reports. Their return from this acquisition continues to grow at great heights. They are expecting a higher level of growth than anticipated.

The consumer discretionary market is booming after increased levels of consumer confidence and consumer spending due to the increase in wages and the tax cut policy. MBUU is aimed towards customers who have a higher disposable income and are willing to spend it on their product. Although this may have not been the case about ten years ago, it is present now. The economy is booming and is expected to grow even further through this year.

MBUU recently has had a huge spike in their trading volume, going from 185,398 shares to 284,414 shares, a significant increase from their usual trading patterns. This could mean that the company is responding to the market and economy and showing sign of growth. This could also predict a move in the stock price that could be beneficial to investors since it is in a bullish manner.

What has the stock done lately?

After releasing their earnings statements on November 7th, 2017 for quarter one FY18 results, there was a spike in the stock price because they had surpassed their estimates on earnings. With the trading volume increasing, there has been a decrease in the stock price. With the second quarter FY18 quarterly results coming out in a couple of days, investors are hopeful that they will beat their estimates.

Past Year Performance: MBUU has had a 43.01% increase in value in the past 52 weeks, but still remains as a “buy” in the eyes of many analysts because they seem room for growth from Cobalt.

 Source: FactSet

My Takeaway

MBUU has seen great heights in their stock in the past year. With the great acquisition with Cobalt, they have been able to stay on top in the industry. Market trends have been in favor of their business, and coupled with the success of their acquisition, they may be able to reach even greater success. MBUU management remains confident on their positive outlook and their continuous increase in their financials. This is still a hold for the AIM Funds.