Thursday, January 21, 2016

Seeking Alpha: Atlas (Copco) Sneezed

How best to frame what has happened to Swedish industrial conglomerate Atlas Copco (OTCPK:ATLKY) in the six months since I last wrote about it? The roughly 25% drop in the ADR share price goes well beyond an Atlas Shrugged reference … we're talking full-on sneezing if not a pulled hamstring.

Some of this share price decline seems reasonable to me. First, Atlas has often carried a pretty healthy valuation and that's harder to support in a virtually no-growth environment. Second, the outlook for mining is feeble at best, while the "general manufacturing" segment served by the company is looking quite weak indeed and particularly so in the U.S. and China.

If you believe in buying good companies going through hard times not of their making, this is a good time to look further into Atlas Copco. There's definitely downside risk if a mild manufacturing recession for 2016/2017 proves more serious or longer in duration, but that's how it goes with "buy the dip" opportunities - there's almost always some reason for that dip.

Continue here:
Atlas (Copco) Sneezed

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