(By Rich Bieglmeier) Polypore International Inc. (PPO) is one of the stocks from within this week's mature bull sectors list. (Our sector review is now exclusively available in our daily, opening briefs)
PPO is a technology filtration company, develops, manufactures, and markets specialized microporous membranes used in separation and filtration processes. It operates in two segments, Energy Storage and Separations Media. The Energy Storage segment offers membranes that provide the function of separating the cathode and anode in applications, including lithium-ion batteries that are used in portable electronic devices, energy storage systems, cordless power tools, and electric drive vehicles; and lead-acid batteries used in automobiles, other motor vehicles, forklifts, and uninterruptible power supply systems.
Polypore International could be preparing a return trip to its recent cycle-high of $48.42. Shares corrected to support after hitting a pivot high to end 2012. The mini-correction carried PPO's stock price down to its 50-day moving average of $41.03. For the last three days, the stock price has hugged the rising 50-day. The embrace appears to have ended today with the stock gaining nearly a dollar and moving away from the key trend-line.
Relative strength, despite the stock price's recent woes, has turned up following a downward thrust and flattening out. This means PPO has enough overhead storage space to fit in a potential run back to $48ish.
Analysts following Polypore expect the industrial goods company to grow sales by 10.40% in 2013, after revenue fell 4.5% in 2012. A fattening topline should add up to EPS growth of more than 25% for the year 2013. Meanwhile, PPO shares trade with a forward P/E of 18.04, a 40% discount to projected earnings growth. In the past five-years, shares have traded with a trailing twelve month P/E as high as 79.58, a low of 16.90, and an average of 31.68, which is 27% higher than its current 24.80 P/E.
If the 2013 consensus for earnings and sales are correct for PPO, iStock can envision PPO's P/E expanding to its earnings growth rate, from a forward P/E of 18.04 to 25. At 2013's consensus estimate of $2.33, a P/E of 25 would put shares in the neighborhood of $58 sometime in the next 12 months or so.
Overall, investors might find Polypore International Inc. (PPO) short and long-term prospects attractive; although, sales and profits will have to live up to Wall Street's forecast for PPO to go in 2013.