Saturday, July 28, 2018

Heavy Machinery Supporting Good Growth At Lincoln Electric

The recovery in heavy equipment was a little slower to show up relative to the overall industrial recovery, but companies like Caterpillar (CAT), Deere (DE), and Cummins (CMI) have been reporting strong revenue growth on the back of strong demand for heavy machinery. Add in healthy commercial construction activity and recoveries in mining and oil/gas, and Lincoln Electric (LECO) is looking at a generally favorable backdrop.

It seems like some of the worries about an imminent end to the cycle have faded, and Lincoln Electric shares have done alright since the first quarter – up about 7% in what has still been a dicey market for industrial stocks. Although the shares don’t look very cheap on an absolute basis, there is some relative value here and Lincoln Electric’s leverage to later-cycle markets could give it more beat-and-raise (and more outperformance) potential from here.

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Heavy Machinery Supporting Good Growth At Lincoln Electric

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