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Hawk’s Nest

Put Sellers Confident in Small-Cap Maker of Hardware Products

by | Nov 3, 2021

Hillman Solutions (HLMN) intriguing small-cap forming a bullish wedge off the August highs and poised to break higher above $12 and make a run. HLMN debuted in December 2020 and traded well mid-year up to $13.50 before pulling back to the 61.8% retracement of the range at $11.50.  The $2.19B company trades 32.5X earnings, 1.5X sales, and 135X cash. HLMN markets and distributes hardware products for retail markets in the US including fasteners, screws, nuts, washers, sockets, and more. The company has partnered with some of the biggest retailers like Home Depot, Lowes, Walmart, Tractor Supply and more while also expanding their footprint around independent stores. The company sees a big opportunity for growth across the remodel and home improvement markets which have strong secular tailwinds. HLMN expects to continue smaller, bolt-on M&A deals as they look to gain share in the $6B market. Analysts have an average target for shares of $16.60 and a Street High $18. Baird positive on 8/25 noting Hillman’s relationships with winning retailers and a difficult-to-replicate sales & service model should drive share gains in the attractively growing home improvement market, and that it should also see significant margin expansion amid mix tailwinds from RDS outgrowth. Raymond James started coverage at Outperform in August. They think Hillman is a well-positioned high-touch wholesale distributor, with clear #1 market positioning, scale advantages, a defensible moat, and attractive margins within its three product categories. They also note the HLMN business model has catalyzed an impressive growth track record that should continue well into the future. Short interest is 3.33%. Oak Hill Capital, Bayberry, and CCMP Capital notable buyers of stock last quarter.