I've made no secret of the fact that I like and admire IPG Photonics (NASDAQ:IPGP), and I can't say that the shares haven't rewarded that enthusiasm. Since my first piece for Seeking Alpha on the company, the shares are up more than 60%, trouncing other laser companies like Rofin-Sinar (NASDAQ:RSTI), Coherent (NASDAQ:COHR), and Newport (NASDAQ:NEWP), and beating the NASDAQ by a relatively comfortable margin as well.
When I last wrote about the company,
the business was running quite smoothly, but I was concerned about the
expectations baked into the valuation. The shares have been more or less
flat since then on a "net" basis, but I did suggest that investors
could look for dips into the $80s as buying opportunities and investors
got two such chances (including a move into the $70s).
Now what? I
still like this business, and I think IPG Photonics is poised for a
decade of revenue growth that averages out to around 9% to 10% a year
coupled with excellent free cash flow margins. I do have some worries
about the potential of "peak margin", as well as the possibility that
IPG Photonics' growth will make it more susceptible to the vagaries of
the machine tool cycles, but no stock comes without risks. The shares do
look a little undervalued now, but I'd be tempted to try another "buy
the dip" move given the macro uncertainties.
Continue here:
IPG Photonics Still On Top Of A Rising Mountain
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