Momentum Meets Value: Preformed Line Products Stock’s Next Leg Could Be Higher
Preformed Line Products (PLPC) stock might be a good candidate to ride the momentum. Why? Because you get strong margin, low-debt capital structure, and strong momentum. Here is some data.
- Revenue Growth: Preformed Line Products saw revenue growth of 15.9% LTM and 4.8% last 3 year average, but this is not a growth story
- Long-Term Profitability: About 12.5% operating cash flow margin and 10.3% operating margin last 3 year average.
- Strong Momentum: Currently in top 10 percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
- Room To Run: Despite its momentum, PLPC stock is trading 12% below its 52-week high.
While revenue growth helps, this selection is all about riding momentum with quality – which we judge by margins (reflective of pricing power / strong business model) and capital structure (not too debt heavy).
As a quick background, Preformed Line Products provides formed wire products and systems for constructing and maintaining overhead, ground-mounted, and underground power and communication networks.
| PLPC | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Electrical Components & Equipment | – |
| PS Ratio | 1.6 | 3.1 |
| PE Ratio | 27.8 | 23.7 |
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| LTM* Revenue Growth | 15.9% | 5.6% |
| 3Y Average Annual Revenue Growth | 4.8% | 5.3% |
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| LTM* Operating Margin | 9.2% | 18.8% |
| 3Y Average Operating Margin | 10.3% | 18.2% |
| LTM* Op Cash Flow Margin | 11.4% | 20.4% |
| 3Y Average Op Cash Flow Margin | 12.5% | 19.8% |
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| DE Ratio | 4.5% | 20.9% |
*LTM: Last Twelve Months
Love the PLPC stock? Great. But don’t get too attached. Stocks crash. High Quality Portfolio lets you navigate that risk.
Stocks Like These Can Outperform. Here Is Data
Here is how we make the selection: We consider stocks with > $2 Bil in market cap, high operating and cfo (cash flow from operations) margin, no instance of very large revenue decline in the past 5 years, low-debt capital structure, and strong momentum as defined by our proprietry momentum metric.
Below are statistics for stocks with this selection strategy applied between 12/31/2016 and 6/30/2025.
- Average 12-month forward returns of nearly 15%
- 12-month win rate (percentage of picks returning positive) of about 60%
But Consider The Risk
That said, PLPC isn’t immune to big drops. It fell nearly 50% in the Dot-Com crash, about 56% during the Global Financial Crisis, and close to 49% in the 2018 correction. The Covid sell-off and last year’s inflation shock also knocked it down around 40%. Solid fundamentals don’t mean it won’t take hits when the market turns south. Even good companies can face tough selloffs in a panic.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.