Atlas Copco Executing Well On Rising Tides

Having followed Atlas Copco (OTCPK:ATLKY) for quite some time, it’s hard to come up with new ways to compliment what has long been one of the best-run industrials out there. Management follows a clear model that prioritizes market leadership, close customer relationships, service and support, and a long-term focus that means they don’t fire engineers or sales reps just because of a market downturn. The results are what they are – a trailing decade of double-digit annualized free cash flow growth, double-digit returns on capital, and outperform relative to both the S&P 500 and its peer group.

And as is so often the case, the valuation on the shares is a major hang-up for me. Yes, I know there are long-term investors in stocks like Atlas Copco and peers/comps like Illinois Tool Works (ITW) (one of the few comparables to outperform Atlas over the last decade), Ingersoll-Rand (IR), Eaton (ETN) and so forth that will argue to just buy and hold irrespective of valuation, but that’s not my approach. Although I don’t expect to be able to buy Atlas Copco shares at substantial discounts to fair value, past history suggests there will be opportunities again in the future to buy in at a more reasonable level of future expectations.

Read more here:
Atlas Copco Executing Well On Rising Tides