Rockwell Automation (ROK)
does well when the economy is expanding and companies are spending more
on factory capex - Rockwell’s performance correlates reasonably well to
U.S. industrial production. Now, though, it is pretty clear that the
vital auto end-market has slowed considerably, and there are signs that
electronics is going the same way, while growth in heavy industries will
weigh on Rockwell’s margins.
Rockwell is by no
means a bad company, but the shares have often carried a premium for
presumed superiority that may not be entirely deserved. What’s more,
expectations for the second half of the year are not exactly easy. I
definitely believe Rockwell is the sort of name you want to buy on
pullbacks, but investors who want to start adding today should at least
be prepared for the risk that things will get worse before they get
better.
Read more here:
A Short-Cycle Deceleration Is Hitting Rockwell Automation
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