Investors Should Ask If THK's Relatively Attractive Valuation Is Too Good To Be True

Veteran investors know better than to just accept every cheap-looking stock as a gift, some of them are more like a sketchy van with “Free Candy” scrawled on the side. That brings me to THK (OTCPK:THKLY), an automation supplier that has certainly recovered, but not to the same valuation extent as others like Fanuc (OTCPK:FANUY) and Yaskawa (OTCPK:YASKY) and may actually be trading at a relatively attractive valuation.

There are definitely some “buts” with THK to consider. First, just as is true for Fanuc and Yaskawa, calls for a cyclical bottom in the September quarter may be too optimistic. Second, THK has seen rivals like Hiwin gain ground by competing on price. Third, THK has a comparatively unattractive segment (the auto parts business) that lacks near-term drivers beyond underlying market recovery. Still, with semiconductor equipment demand set to improve and machine tools quite possibly bottoming, this could be a time to reconsider this name.

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Investors Should Ask If THK's Relatively Attractive Valuation Is Too Good To Be True