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Manufactured Homes

In: Business and Management

Submitted By rebekah0841
Words 465
Pages 2
Manufactured Homes, Inc.
This Winston-Salem company sells affordable Southern comfort: ful ly furnished and carpeted mobile homes for as little as $10,000. Robert Sauls, the 59- year-old founder and chairman, was an orphaned boy who never finished h i g h school. Through acquisitions, Sauls has built the retailer into the industry's largest, with annual sales ballooning to about $180 million in four years. Th e company sells the homes, built primarily by Fleetwood Enterprises and Redman
Industries, to rural blue-collar workers in the Southeast. "Our people buy in good times and bad," says Sauls. If he can raise the capital, he foresees a doubling of sales in four to five years. The stock recently sold at 6.5 times estimated 1988 earnings. Jane Edwards, Director of Research at a small Boston-based investment management firm specializing in growth stocks, noted the above review of Manufactured Homes in the February 15,
1988 issue of F o rtun e magazine's Companies To Watch column. She knew that attractive growth stocks are hard to find and wondered whether Manufactured Homes would be a good addition to her firm's growth stock portfolio. She checked the recent performance of Manufactured Homes' common stock and noted that the stock performed favorably relative to the stock market (see Exhibit 1).
Jane Edwards asked her assistant Peter Herman to gather additional information on the company and to write a report analyzing the company's recent financial statements.
Company Background and Marketing Focus
Herman's preliminary research on Manufactured Homes indicated that the company was founded in 1975 with two retail outlets for mobile homes. The company grew rapidly and by March
31, 1987, had a network of 120 retail outlets located in seven southeastern states. Eighty-five percent of the company's retail centers were located in North Carolina, South

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