Monday, December 14, 2020

Graco Is A Top-Tier Industrial Name, But The Price Is Not So Compelling

As I said in my prior piece on Graco (GGG), investors don’t often get a chance to buy into this top-notch industrial company at a traditionally attractive (or even reasonable) valuation. When that happens, as it did in March and April of this year, it’s usually because there’s abundant fear, if not outright panic, about the industrial sector. Since the spring, though, investors have returned to industrials with enthusiasm, with valuations pushed up by low rates and a fear of missing out ahead of what should be some good recovery numbers in 2021.

Graco is not only once again trading at a robust valuation, it’s trading at a pretty rich multiple on a historical basis. Then again, it’s not so out of line with other top-quality industrials, so I suppose investors more comfortable with relative valuation (or just less sensitive to valuation in general) may still find something to like here. While I can’t fault the quality of this name, and I’ve long advocated for the notion that valuation is not itself an impediment to further rerating, investing in high-multiple stocks like Graco really isn’t within my comfort zone or core focus.

Click here to continue reading: 

Graco Is A Top-Tier Industrial Name, But The Price Is Not So Compelling

No comments: