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WSI Industries Inc. (WSCI) Has a Strategic Competitive Advantage

This stock counts as a member of the Aerospace and Defense Industry. It has built such an awesome reputation for precision contract manufacture over the last half-century that its clients include recreational vehicle manufacturers and the bioscience industry as well.

It is a classic case of the inherent value of a stock being way above the numbers. The core asset of the company is a specialized manufacturing site that is spread over nearly 50,000 square feet. There is plenty of room for expansion. Lighting, temperature control, layout, and a highly skilled work force ensure metal cutting to one ten-thousandth of an inch. Downstream industrial clients cannot afford such in-house precision, and hence the order books of this company are generally full. It has just won a new customer that will provide some $2 million in additional future annual revenues.

It is not just a matter of technical excellence. The management philosophy of customer integration would do any marketing company proud. This company limits itself to contract manufacture. It adapts entirely to client needs. The company is willing to work with any metal, including materials bought directly by the companies it serves.

Business results are in line with the elegance of corporate strategy. Annual sales growth during the Most Recent Quarter has been 45%. This has been achieved at a time when the industry has averaged a modest revenue growth of just about 10%. Net Earnings during this period have jumped to 15 cents a share against just six cents for the same quarter last year.

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