Boca Raton, FL, July 8--Shares in QEP, the Boca Raton flooring tools maker, have more than doubled since they traded at $5.11 on March 17--closing Monday at $10.55, up 11 cents a share, according to the Palm Beach Post. That's after reaching a six-month high of $10.60 Wednesday.
And it may not end there.
Leonard Gould, QEP's vice president of national accounts and the son of the company's founder, Monday attributed the run-up to the fact that QEP makes flooring tools such as trowels, saws, nippers and tile cutters, tying it to one of the few mainstays of the economy over the past year--residential real estate construction.
"Tourism is crippled. Technology is down. But everybody continues to pour money into their homes," Gould said. "Companies that are those types of retailers--Home Depot and Lowe's--are doing well, and the companies that supply them continue to do well."
New and used home sales set a record in May as mortgage rates fell to a record low average of 5.48 percent for a 30 year fixed rate mortgage. As a by-product of the robust housing market, do-it-yourself stores and their suppliers are engaging the interest of investors as well as customers. Home Depot is trading in the $33 a share range from a low of $20 four months ago; Lowe's is in the $43 a share range, up from $36 to $40 in March.
Home buyers, as well as homeowners are the reason the company's sales jumped to $129 million in the fiscal year that ended Feb. 28, from $110 million the previous fiscal year. (The company Wednesday will release results for the fiscal first-quarter that ended May 31.)
Institutional investors are responsible for the jump in the firm's share price, buying stakes in QEP stock for the first time. Two--Dimensional Fund Advisors of Santa Monica, CA, and Brandywine Asset Management in Wilmington, DE--bought 109,500 and 27,875 shares, respectively, according to March ownership statements filed with the U.S. Securities and Exchange Commission.
Larry Rader, a partner with LAR Management in New York, said his company recently bought a stake in QEP because it holds a unique niche in the home improvement marketplace and it's unlikely anyone will pose a significant market threat.
"In technology, there's always some idiot in a garage who can make something better than you," Rader said. "But who's going to design a new trowel or go into the trowel business?"
If QEP can sustain a stock price above $10 a share, the company might entice Wall Street investment houses to assign an equity nalyst to follow its business and rate its stock. Often, that will bring even greater attention to a company, Chief Financial Officer Marc Applebaum said.
"The stock had been trading below five for so long that we weren't followed. We're hopeful people will begin to start covering us," Applebaum said.
