Plenty of stocks have recovered from pandemic-driven weakness earlier this year, but Nidec (OTCPK:NJDCY) (6594.T) has done a little better than most, rising about 50% since my last update and the ADRs have outperformed the average U.S industrial by a healthy margin over the past year. I believe this renewed bullishness is being driven not only by strong near-term performance in the small motor business, but also increasing enthusiasm over the company’s long-term opportunity in motors for hybrids and electric vehicles.
I can’t really say that Nidec shares are cheap now, but I do see a strong growth story that can possibly carry the shares further. Not only does Nidec have a strong established business in small motors (and leverage to data center growth), the growth opportunity in EV motors has been getting better and better and Nidec also has some underappreciated opportunities in areas like appliance motors, robotics, and thermal management. I don’t really favor “forget valuation and focus on the story” stocks, but I do like the growth drivers here and I wouldn’t be in a rush to cash in here just yet.
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