MSA - Lakeland Industries: Redirected Strategic Focus Should Help Realize Earnings Power

2024-07-16 08:15:00 ET

Summary

• Lakeland Industries redirected its strategic focus to its nascent fire services division.
• The industry is estimated to grow 5% over the next several years and benefits from being non-discretionary in nature as it serves the safety needs of public workers.
• LAKE owns its own manufacturing and has the opportunity to bring it in house for acquired entities.
• I would expect LAKE's multiple to expand as they realize their earnings power and more investors appreciate the ongoing transformation.

The following segment was excerpted from this fund letter.

Lakeland Industries ( LAKE )

There were several exciting opportunities that came across my radar during the quarter, one of which was Lakeland Industries. LAKE makes protective clothing for personal and industrial uses. Whenever there is a health scare, revenues get a boost and the price spikes off of the potential for windfall earnings; as you may have guessed, they were a Covid darling with the stock moving up 400%+ at one point. Conceptually, they are known to be a trading security and not a real holding for long-term investors....

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