Titan Intl. will benefit from agriculture
Titan International Inc. (TWI), Quincy , Ill. North America tire market with the other two big competitors, Firestone and Michelin. TWI just inked a new deal with Deere last spring and plans to continue increasing market share in the domestic Ag market.
Its shares traded as high as $37.99 last summer, and dropped as low as $3.04 amid declines in prices of commodities like oil, copper and corn. TWI is currently benefiting from increased sales of combines inNorth America . You can usually bet that the larger the tire/wheel is, the larger the margin for TWI. Thus low sales levels in the small tractor and construction equipment (ie. backhoes and skid-steers), have not hurt TWI badly because these tires/wheels carry low margins to begin with. Even though large Ag equipment sales probably peaked this spring, easy credit, strong balance sheets and historically-high crop prices should provide a floor for long-term sales in the North America market.
The other primary catalyst that TWI has going for it is its entrance into the giant mining tire market late last year. These tires range from 51” to 63” tires (ASP’s up to $50,000/each) and are used on large mining trucks (made by CAT, Terex, Liebherr, Komatsu) for the oil sands and other mines around the world including coal, gold, copper, and iron-ore. The headline price of these commodities over the past would seem to argue that the market for these tires is really crappy. However, Canadian oil sands producers are increasing production due to all of the investment over the past few years. Suncor (SU), one of the largest, is targeting a 30% increase in production in ’09 vs. ’08. We can all see that gold prices have been on a tear over the past year, coal production is fairly steady, and copper prices have rallied almost 40% in the past few months. Most importantly though for TWI, Michelin and Firestone have not been able to keep up with demand for these tires in the past 4 years. Up until late last year there was a significant shortage for these tires around the world and before the economic slowdown hit, industry experts expected the shortage to last until 2012. TWI has found a nice little niche market here and the mining tire business will start booming again as inflation returns. (http://www.time.com/time/magazine/article/0,9171,1531322-1,00.html)
While I think the stock will trade higher over the next year and those who are long the stock will be happy with their investment, the most utility from following TWI will always come from listening to quarterly conference calls. Maury Taylor, current CEO/Chairman (and also aU.S.
Nathan Henderson
University of Wisconsin-Madison
MBA Class of 2009
Its shares traded as high as $37.99 last summer, and dropped as low as $3.04 amid declines in prices of commodities like oil, copper and corn. TWI is currently benefiting from increased sales of combines in
The other primary catalyst that TWI has going for it is its entrance into the giant mining tire market late last year. These tires range from 51” to 63” tires (ASP’s up to $50,000/each) and are used on large mining trucks (made by CAT, Terex, Liebherr, Komatsu) for the oil sands and other mines around the world including coal, gold, copper, and iron-ore. The headline price of these commodities over the past would seem to argue that the market for these tires is really crappy. However, Canadian oil sands producers are increasing production due to all of the investment over the past few years. Suncor (SU), one of the largest, is targeting a 30% increase in production in ’09 vs. ’08. We can all see that gold prices have been on a tear over the past year, coal production is fairly steady, and copper prices have rallied almost 40% in the past few months. Most importantly though for TWI, Michelin and Firestone have not been able to keep up with demand for these tires in the past 4 years. Up until late last year there was a significant shortage for these tires around the world and before the economic slowdown hit, industry experts expected the shortage to last until 2012. TWI has found a nice little niche market here and the mining tire business will start booming again as inflation returns. (http://www.time.com/time/magazine/article/0,9171,1531322-1,00.html)
While I think the stock will trade higher over the next year and those who are long the stock will be happy with their investment, the most utility from following TWI will always come from listening to quarterly conference calls. Maury Taylor, current CEO/Chairman (and also a
Nathan Henderson
University of Wisconsin-Madison
MBA Class of 2009
Posted by Colvin & Co. at 5/25/2009 7:27 PM 
Categories: Agriculture Companies
Tags: Wisconsin agriculture commodities
Categories: Agriculture Companies
Tags: Wisconsin agriculture commodities
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