A Window Of Opportunity At Atlas Copco, But Is It Wide Enough To Climb Through?

Atlas Copco (OTCPK:ATLKY) (ATCOa.ST) is one of those top-notch companies that has historically validated the concept of a watchlist – bide your time, wait for your opportunity, and then take advantage when it arrives. Of course, those opportunities always come with caveats – Atlas Copco doesn’t sell off “just because”, and that is the case today. While the slowdown in semiconductor capex orders that rattled investors may well be a temporary blip, nobody knows how big of a blip it will be and it seems less likely that strength in the remaining businesses will produce meaningful additional boosts to estimates during this up-cycle.

Atlas Copco shares do look undervalued on the basis of forward EV/EBITDA, but not yet on the basis of discounted free cash flow and that is my preferred “buy” signal (though “preferred” is by no means the same as “perfect”). I do see some downside risk as the industrial up-cycle ages, and with the possibility of a longer pause in semiconductor order growth, but I wouldn’t try to get too cute with timing this opportunity unless you expect a sharper correction to industrial equipment is on the way.

Read the full article here:
A Window Of Opportunity At Atlas Copco, But Is It Wide Enough To Climb Through?