It’s not enough for a company’s shares to be cheap. By
and large, unless there’s something within the story that can drive
better performance (or at least better than expected performance), a
cheap stock without drivers can stay cheap for a frustratingly long
time, leading to the so-called “value trap” that is the bane of value
and GARP investors.
And that’s basically my issue with SPX Flow (FLOW)
in a nutshell. The shares do look undervalued, but it’s hard to find
much about this business that’s really exciting. The Food & Beverage
business is good and somewhat defensive, but the Industrial business is
a more typical short-cycle equipment business and the overall margins
don’t impress. An under-leveraged balance sheet gives management some
options, but it’s tough to get excited about the operating story here.
Read the full article here:
SPX Flow: Undemanding Valuation, But Uninspiring Drivers
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