I really want to like Twin Disc (TWIN).
Not only does this small and almost unfollowed company make the sort of
heavy industrial gear that I like, it's a good play on multiple markets
that I believe are due to recover. Twin Disc also offers a level of
information available to investors that companies 10 times or 100 times
larger often fail to offer.
The short-term question is timing - I
am confident that fracking, off-highway vehicles, and marine markets
will recover, but I'm not so confident about when. The longer-term
question is one of margins and operating cash flow generation - if Twin
Disc can't generate double-digit operating cash flow margins as a
percentage of sales, it is hard to see how Twin Disc's probable streams
of cash flow are undervalued today.
Read more here:
Fracking Will Recover, But Can Twin Disc Achieve Better Margins?
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