Friday, August 29, 2014

Seeking Alpha: Order Growth Starting To Support The MTS Systems Story

MTS Systems (NASDAQ:MTSC) is not at all a well-known company - just two analysts follow this manufacturer of industrial testing systems and sensors - but what it lacks in popularity may not matter to patient investors. The company is well-placed to take advantage of growth in the Chinese auto OEM sector, as well the ongoing trend across multiple industries to make greater use of composite materials, and is supplementing its traditional strength in testing systems with a growing higher-margin sensor business and an increased focus on service.

These shares have more or less tracked the S&P 500 since my initial write-up in September, but better things could be in store relatively soon. Order levels have accelerated recently and the company should be nearing the end of margin pressures tied to upfront spending meant to grow the service business. Although I still do not believe the company will hit management's ambitious revenue growth targets over the next few years, the shares do appear undervalued and hitting those targets could be an invaluable source of upside.

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Order Growth Starting To Support The MTS Systems Story

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