DXP Enterprises: Earnings overreaction presents opportunity

• Buy DXPE around 33.30

Smartguystocks.com pick DXP Enterprises (Nasdaq: DXPE) released second quarter earnings last night. Sales increased 22% and net income grew 16% YoY. Yet the market was looking for more, and the stock is down almost 25% today.

According to CEO David Little, the company saw some unexplained order softness in June. Since then, sales have picked back up and the company is on track to meet its targets for the year. Little said that many orders have been coming in for the fourth quarter and backlog is very strong. He expects YoY top-line growth for the third and fourth quarters to exceed 30%.

The company also noted that the acquisition pipeline looks strong and it expects to use the cash from its recent share offering by the end of the year.

With the underlying business still strong and growing rapidly, and the stock trading for a .76 P/S and a 10 PE at last check, this is a great opportunity to take advantage of the short-term panic and load up for the long haul. While it’s painful to watch a core holding drop so much, it’s important to keep a long-term perspective and not be seduced by the day-to-day gyrations of the market.

Disclosure: SmartGuyAB is long DXPE