There's a pretty broad universe now of beaten-down
industrial conglomerates that would seem to offer attractive upside for
patient investors. Dover (NYSE:DOV)
would seem to be among them, as the sharp decline in the energy
business has mauled the company's financial results but not so much that
the company couldn't still generate double-digit FCF margin in 2015.
Dover has never been the most exciting of the
conglomerates, but I don't think mid-single digit long-term growth in
free cash flow should be out of reach, and that still supports a fair
value in the high $60's. The problem is that it's hard to see what gets
investors interested in owning the shares in the next few quarters.
Dover doesn't have meaningful exposure to popular end markets like
aerospace, construction, healthcare, or passenger vehicle production, so
unless energy starts recovering sooner than most expect, this stock
will probably require some patience.
Read the full article here:
Dover Probably Undervalued, But Where's The Spark?
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