If you're going to pay up for a stock, you should at least get what you think you're paying for - I believe 3M (NYSE:MMM) fits that bill given its strong record of innovation and returns on capital, and I think there's an argument to be made that Danaher (NYSE:DHR)
fits on the growth side of the ledger. There are going to be readers
who take issue with Danaher's continuous M&A and the resulting high
level of goodwill and intangibles on the balance sheet. Likewise, some
investors have been alienated by the high multiples the company paid for
Nobel Biocare and Pall.
The company also deserves a lot of credit for its
Danaher Business System. I have no problem turning my high ambient level
of cynicism against all manner of corporate-speak nonsense, but Danaher
has acquired more than a couple of companies that I followed in my
sell-side days, and hearing back from my contacts, acquaintances, and
friends in those companies leads me to believe that DHR really does have
a strong set of policies aimed at driving ongoing customer-focused
revenue growth and margin improvement.
I still value Danaher on a pre-split basis, and I don't
see the shares as especially cheap on the assumption on mid-single-digit
revenue growth and high-single-digit free cash flow growth. As a strong
competitor with ample non-cyclical exposure, it's not the worst place
to wait out this industrial recession.
Continue here:
Danaher Remaking Itself Once Again
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