I'm not sure how a reader could fault Rotork (OTC:RTOXY)
on the basis of quality. This British industrial company has
established leading market share in valve actuators (devices fitted to
valves to control them, and the flow of fluid and gas), and actually
grew through the 2009 downturn when most industrial companies were
seeing significant pressure in their business. Rotork has not just
grown, it has grown profitably, with a five-year average return on
invested capital over 30%.
Quality isn't the issue with Rotork,
but valuation might be. I readily admit that high-quality companies
often get and hold a premium multiple. Rotork is also looking to
redefine its business once again and expand its addressable market by
about a third in the process. I'm not recommending betting against
Rotork, but the market already seems to be counting on 10% annual free
cash flow growth for the next decade and there are cheaper industrials
out there right now.
Read more here:
Rotork Has All The Quality You Could Want
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