Is Dover (DOV) a short-cycle industrial, driven largely by factors like industrial production, or is it a true "market-plus" growth compounder with exposure to fundamentally attractive end-markets? Bears will say the former, bulls the latter, and I'm more of the mind of "both … but more of a compounder". While short-cycle end-market recoveries are undoubtedly helping Dover right now, the business is already beyond pre-pandemic levels and there's a good argument that this business can continue to outperform with a diverse range of leading niche businesses.
I was too early in going "neutral" from "bullish" on Dover back in March of this year, and I likewise didn't really appreciate the company's leverage to growth opportunities like HVAC-R and bioproduction, as those have been significant drivers this year. The almost-20% outperformance over the broader industrial group in that short span makes that a painful miss, and the market is definitely liking what it's seeing from Dover today.
I can't really make the argument that Dover is undervalued today, other than that I think the odds favor beat-and-raise quarters and an improving long-term outlook for revenue and margins. Said differently, good companies "find a way", but the stocks of even the best companies can overshoot.
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