In An Ugly Market, Cognex Looking Better

In writing on Cognex (CGNX) in the past, I’ve said that whatever circumstances it would take to make this leading machine vision company look undervalued, they would probably look pretty ugly. And here we are – whether Covid-19 is a valid reason for a widespread market sell-off or just an excuse for institutions to sell off expensive stocks, it has driven a lot of quality names to much more reasonable valuations.

Cognex certainly has near-term risk. Capex in the auto sector remains weak and Cognex management believes that both auto and consumer electronics capex may not rebound strongly in 2020. Economic concerns and the election cycle could likewise weigh on logistics capex investing. Longer term, Cognex now has a new rival to worry about, and so on. Point being, there’s always going to be a reason not to buy Cognex (or almost any stock, really), but I believe that this is a relatively rare chance to buy Cognex at a price that at least appears reasonable on a long-term basis.

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In An Ugly Market, Cognex Looking Better