There are definitely some valid reasons to like Colfax (CFX). Not only is this industrial conglomerate explicitly looking to replicate much of the successful Danaher
model, the company has the highest leverage to emerging markets of
almost any peer and is likewise leveraged to industries like power
generation and oil/gas/petrochemicals where capital expenditures should
be strong for several years.
There is a point where enough's
enough, though. Colfax shares seem to be pricing in FCF growth of close
to 16% (including the recent acquisition of Victor Technologies) and
trade at more than 14x 2014 EBITDA estimates. Even allowing that Colfax
can be a revenue and profit growth leader in the industrial sector over
the next few years, that seems like a steep price to pay.
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Stronger Organic Growth Has Investors Excited About Colfax
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