CASE STUDY: Atlas Engineered Products (APEUF)

December 11, 2022

Atlas Engineered Products operates in Canada’s truss, wall panels, and engineered wood products industry.  Atlas has acquired and improved 7 companies since going public in late 2017.

Atlas’s specialist design team uses cutting edge design and engineering technology to ensure that their clients get consistent, accurate, top-quality products.

Here is the company’s most recent investor presentation:

Here is a good writeup on Value Investors Club:

The market for trusses, wall panels, and modular systems is local because it is too expensive to transport such large items over a long distance.  As a result, this market is extremely fragmented.  There are hundreds of small regional operators.  Many of these operators need succession planning.  Atlas thus has an opportunity to continue making acquisitions.

There are clear benefits for Atlas to consolidate this market.  These include operational efficiencies, technological advances, advantages of scale in procurement, and expanded product distribution.  (Many regional operators are not able to invest in technology and automation.)

Atlas focuses on the higher added value and most scalable products.  It quickly winds down or sells lower margin businesses.

Here are the current multiples:

    • EV/EBITDA = 2.00
    • P/E = 5.25
    • P/B = 1.15
    • P/CF = 2.69
    • P/S = 0.80

Insider ownership is 17.7%, which is good.  TL/TA (total liabilities/total assets) is 38.4%, which is also good.  ROE is 41.1%, which is excellent.

The Piotroski F_score is 8, which is very good.

Intrinsic value scenarios:

    • Low case: During a recession, the stock could fall 50% from $0.54 to $0.27.
    • Mid case: The current EV/EBITDA is 2.0, but in a normal environment it should be at least 6.0.  That would mean the stock is worth $1.62, which is 200% above today’s $0.54.
    • High case: Cash flow is likely to keep growing at 30% per year (or more).  In five years, cash flow will be 270% higher.  If price-to-cash flow doubles to 5.4, then the share price will reach $3.46, which is 540% higher than today’s $0.54.


The housing market is cyclical.  Economies are slowing down as interest rates rise.  There will likely be a recession (which would slow down organic growth but increase acquisitions).  But over the longer term, demographics are a tailwind.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.