Issue #121

Clear "Buy" signals, recent mergers, and 2026 revenue outlooks.

The global automotive industry is no longer just about horsepower and steel; it’s being redefined by a quiet revolution in intelligence and resilience. While the headlines focus on the latest electric vehicle launches, the real value is being captured by the companies that keep the world moving—whether by recovering what’s stalled or by providing the digital brain that prevents it from stalling in the first place.

As the industry shifts toward software-defined vehicles and heavy-duty infrastructure, two layers of the market have become essential: the hardware that clears the road and the silicon that guides the journey.

This is where the automotive conversation moves from consumer trends to industrial foundations—and where two undervalued leaders are carving out dominant positions.

👉 One company is the undisputed global titan of towing and recovery, turning every roadside breakdown and military logistics challenge into a steady stream of revenue.

👉 The other is the high-tech architect of the digital cockpit, providing the integrated hardware and software "brain" for over 11 million vehicles worldwide.

👉 Both are profitable, strategically expanding through smart mergers, and currently receiving strong "Buy" signals from analysts.

In this edition, we break down the mechanical muscle and the digital intelligence powering the modern transport economy—and why these two stocks are the bedrock of a smarter, more resilient automotive portfolio.

Miller Industries (NYSE: MLR)

Miller Industries (NYSE: MLR) is the world’s largest manufacturer of towing and recovery equipment, offering a comprehensive array of wreckers, car carriers, and transport trailers. Often referred to as the "backbone of the towing industry," Miller operates through a diverse portfolio of brands including Century, Vulcan, and Chevron. Its equipment is essential for everything from roadside assistance and vehicle repossession to heavy-duty recovery of semi-trucks and military applications.

Business Model and Revenue Streams 📦

Miller Industries operates on a high-touch manufacturing model that focuses on engineering premium, specialized vehicle bodies that are then integrated onto truck chassis. Its revenue is primarily derived from two major categories:

• Towing and Recovery Equipment Sales: This is the core revenue driver. Miller manufactures a wide range of products—from light-duty "wreckers" used for standard cars to massive heavy-duty units capable of moving 75-ton loads. These sales are made through a global network of independent distributors.
• Military and Export Markets: A growing portion of Miller’s revenue comes from international markets and government defense contracts. These long-cycle projects provide a steady backlog of work, such as the company’s recent $150 million in secured military commitments for heavy-duty recovery units.

Macroeconomic policies and industrial conditions play a significant role in Miller’s performance. The company is highly sensitive to supply chain stability, particularly the availability of truck chassis from major OEMs. When chassis production slows due to labor strikes or electronic component shortages, Miller’s ability to deliver finished units—and thus recognize revenue—is hampered. Conversely, the "Buy American" push and increased infrastructure spending have bolstered demand for their heavy-duty units. Additionally, as the average age of vehicles on the road increases, the demand for towing and recovery services—and consequently, the equipment to perform them—remains historically resilient.

Recent Performance and Corporate Developments 📈

Miller Industries reported its fourth-quarter and full-year 2025 results on March 4, 2026, showcasing a strategic "reset" of production levels to align with distributor inventory needs.

Q4 2025 and Full Year Highlights: 💰

• Revenue Performance: For Q4 2025, Miller reported $171.2 million in revenue. While this was a decrease year-over-year as the company intentionally lowered production to normalize field inventory, it beat analyst estimates of $164.2 million. Full-year 2025 revenue totaled $790.3 million.
• Profitability Surprise: The company delivered a massive earnings beat in Q4, reporting an EPS of $0.29 against a consensus forecast of $0.03. This outperformance was driven by disciplined cost management and a favorable shift in product mix.
• Dividend Increase: Demonstrating confidence in its cash flow, the Board raised the quarterly dividend by 5% to $0.21 per share.

Strategic Initiatives and Mergers: 🤝

The most significant recent development was the all-cash acquisition of Omars S.p.A. on December 2, 2025, for approximately $20.3 million. Based in Italy, Omars is a premier manufacturer of recovery vehicles in Europe. This merger is a strategic play to expand Miller's European manufacturing footprint and is expected to be accretive to earnings within the first year. Furthermore, the company announced a $100 million expansion of its Ooltewah facility, which will be critical for meeting the surge in heavy-duty and military demand expected through 2027.

Profitability and Fair Value 🎯

Miller Industries is currently in a phase of margin expansion. While 2025 saw a dip in total net income to $23 million (down from prior highs due to inventory adjustments), the company’s gross margin improved to 15.5% in the final quarter.

In terms of fair value, the stock appears to be trading at an attractive entry point. With a forward P/E ratio of approximately 8.11, it is priced significantly lower than many peers in the specialized machinery sector. Analysts suggest that the market has not yet fully priced in the revenue ramp-up expected in late 2026. Internal valuation models often place the intrinsic value of MLR closer to $48.00–$50.00, suggesting that at its current levels, it remains undervalued relative to its dominant market share and projected cash flows.

Analyst Estimates and Ratings 📊

• Consensus Rating: The consensus among analysts is a "Buy." The stock has gained significant traction in the last 30 days due to the massive Q4 earnings beat and the clear 2026 guidance.
• Price Targets: The average 12-month price target is approximately $49.47, with some bullish analysts setting targets as high as $55.00. This implies a double-digit upside from recent trading prices.
• 2026 Outlook: Analysts are optimistic about the company’s revenue guidance of $850 million to $900 million for 2026, anticipating that manufacturing activity will accelerate through the first half of the year.

Investor-Focused Takeaway: Is MLR Right for Your Portfolio?

Miller Industries offers a compelling "value with growth" story. It is a market leader with a nearly 60-year track record of dividends, now entering a high-growth phase fueled by European expansion and a massive military backlog.

What to Watch in the Near Term: 📈

• Chassis Supply: Any disruptions in the automotive supply chain could delay the company's projected revenue ramp in the second half of 2026.
• Ooltewah Expansion Progress: Watch for updates on the $100 million facility expansion; staying on schedule is key to fulfilling the $150 million military backlog.
• Omars Integration: Look for signs that the European acquisition is meeting its goal of being accretive to earnings in the first half of 2026.

Recommendation:

Miller Industries (MLR) is a "Strong Buy" for investors seeking a stable, industrial-sector player with a clear catalyst for growth. The combination of a low P/E ratio, a growing dividend, and a dominant competitive position makes it a standout choice in the auto parts and equipment space.

ECARX (NASDAQ: ECX)

ECARX (NASDAQ: ECX) is a global automotive technology provider that acts as the "brain" for the next generation of software-defined vehicles (SDVs). Founded by Geely’s Ziyu Shen and Eric Li, the company specializes in developing full-stack hardware and software solutions, ranging from advanced system-on-chips (SoC) to digital cockpits and AI-driven automotive operating systems.

Business Model and Revenue Streams 📦

ECARX operates a "full-stack" technology model, meaning it provides everything from the physical silicon chips to the user-facing software. This vertical integration allows automakers to reduce the complexity of their supply chains. Its revenue is generated through three primary channels:

• Sales of Goods: This is the dominant revenue stream (contributing roughly 74% of total sales). It involves the sale of automotive computing platforms and SoC modules like the Antora and Pikes series. These components are the physical hardware that powers in-car intelligence.
• Software Licensing: ECARX earns high-margin revenue by licensing its proprietary software stacks and intellectual property to OEMs. This includes operating systems and middle-ware that allow cars to run complex AI applications.
• Service Revenue: This includes income from specialized design and development contracts where ECARX helps manufacturers integrate custom smart solutions into specific vehicle models.

The company’s growth is heavily influenced by global semiconductor supply chains and monetary policy. In early 2026, management noted that rising memory costs are a headwind for gross margins. Furthermore, as a global player with R&D hubs in Sweden, Germany, and the U.S., the company is sensitive to trade policies between China and the West. However, ECARX is mitigating this by shifting its focus; it aims to generate 50% of its revenue from international markets by 2030, reducing its reliance on any single domestic economy.

Recent Performance and Corporate Developments 📈

ECARX reached a major financial inflection point in late 2025 and early 2026, transitioning from a high-burn startup to a profitable technology leader.

Q4 2025 and Full Year Highlights: 💰

• Revenue Growth: For the fourth quarter of 2025, ECARX reported record revenue of $304.7 million, a 13% increase year-over-year. For the full year, revenue hit $847.9 million.
• Profitability Milestone: The company achieved its second consecutive quarter of positive net income ($2.8 million) and positive adjusted EBITDA ($22 million), proving that its "lean operating strategy" is working.
• Production Volume: Cumulative installations of ECARX technology reached 11 million units worldwide by the end of 2025, a 36% jump from the previous year.

Strategic Initiatives and Mergers: 🤝

On April 8, 2026, ECARX announced a major strategic move: the board approved a preliminary plan to acquire a minority stake and key intellectual property (specifically the FlyMe OS) from DreamSmart Technology. This acquisition is intended to deepen ECARX's software capabilities, particularly in creating a seamless "phone-to-car" user experience. Additionally, the company secured nearly $200 million in fresh capital through Geely and ATW Partners to fund its expansion into South America and Southeast Asia.

Profitability and Fair Value 🎯

ECARX is currently "walking the bridge" toward sustained annual profitability. While it posted a net loss for the full year 2025, the profit in the final two quarters suggests a clear upward trajectory. Management has issued 2026 revenue guidance of $1.0 billion to $1.1 billion, representing 20-30% growth.

Regarding fair value, ECARX appears to be a classic "hidden gem" in the tech space. It currently trades at a significant discount to its peers like Mobileye or Aptiv, largely due to its recent history of losses. However, with a market capitalization around $360 million—less than half of its annual revenue—the stock is viewed as deeply undervalued by growth-oriented investors. If the company maintains its positive operating income throughout 2026 as promised, a significant re-rating of the stock price is likely.

Analyst Estimates and Ratings 📊

• Consensus Rating: Analysts have shifted to a "Strong Buy" in the last 30 days. The successful capital raises and the surprise Q4 profit have eliminated many of the liquidity concerns that previously plagued the stock.
• Price Targets: Recent analyst updates suggest an average 12-month price target of $3.30, which represents a massive upside from its current trading range of approximately $1.05.
• Investor Sentiment: Most analysts point to the 18 OEM partnerships (including the Volkswagen Group) as evidence of a "sticky" business model that will drive long-term value.

Investor-Focused Takeaway: Is ECX Right for Your Portfolio?

ECARX is a high-reward play on the future of AI-driven mobility. It has successfully navigated the "valley of death" for tech startups and is now entering a phase of profitable scaling.

What to Watch in the Near Term: 📈

• DreamSmart Acquisition: Watch for the finalization of the FlyMe OS deal; this software is critical for competing with Apple CarPlay and Android Auto.
• Memory Costs: Monitor gross margins. If electronic component costs continue to rise, it could squeeze the 15-18% margin target for 2026.
• International Expansion: Success in Latin America with Volkswagen will be a litmus test for whether ECARX can truly thrive outside of the Geely ecosystem.

Recommendation:

ECARX (ECX) is an aggressive "Buy" for investors who can tolerate the volatility of the EV and auto-tech sectors. Its current valuation does not seem to reflect its $1 billion revenue potential or its recent pivot to profitability.

Final Take: The Mechanical Muscle and the Digital Brain Powering Mobility

The automotive revolution isn’t just about shiny new cars—it’s about the infrastructure that keeps transport moving and the intelligence that makes it smarter. This requires two things: heavy-duty hardware that can handle any recovery mission and integrated silicon that turns a vehicle into a high-performance computer.

That’s where Miller Industries (MLR) and ECARX (ECX) stand apart.

🏗️ Miller Industries (MLR) — The Global Titan of Recovery Infrastructure

✔ Undisputed market leader in towing and recovery equipment with a massive moat.

✔ Expanding global footprint via the strategic acquisition of Omars S.p.A. in Europe.

✔ Massive $150 million military backlog and a 5% dividend hike signaling financial strength.

➤ Best for: Value-oriented investors seeking a defensive, high-moat industrial leader with consistent cash flow and military-grade resilience.

🧠 ECARX (ECX) — The High-Tech "Brain" of the Smart Vehicle

✔ Full-stack technology provider with over 11 million vehicle installations globally.

✔ Recently achieved profitability milestones with $1 billion revenue guidance for 2026.

✔ Deep integration with the Geely ecosystem and expanding partnerships with global OEMs like VW.

➤ Best for: Growth-focused investors looking for an undervalued entry into the AI-driven, software-defined vehicle market at a fraction of peer valuations.

Investor Insight

🧩 Want dominant industrial muscle and steady dividend growth? → MLR

⚙️ Want high-growth AI technology with a clear path to scaling? → ECX

Bottom Line:

Transportation doesn't function without the ability to clear the roads and the intelligence to navigate them. Miller Industries owns the physical infrastructure of recovery, while ECARX provides the digital nervous system for the next generation of cars.

As the world moves toward smarter, more durable transportation, MLR and ECX aren’t just niche players—they are the bedrock of the modern automotive economy.

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Happy Trading
​— Team Premium Stock Alerts