Every once in a while even great companies can go on sale, so with a definite shift in sentiment away from shorter-cycle industrials I thought it was time to take another look at Graco (GGG) in the hope that maybe the Street had moved on and left a better valuation in play. Yeah … no.
Graco has underperformed the broader industrial space since my last update (by about 10%) despite two very strong quarters, but that’s not enough to put the stock into value range. The business is performing very well and there could be more upside to my raised 2021 and 2022 revenue estimates (where I’m looking for growth of about 19% and 6.5%, respectively), but that doesn’t exactly put Graco into bargain territory. Should this short-cycle fade continue, though, it may be possible to get in with a decent long-term expected total return, so I’d suggest at least keeping this name on a watchlist.
Follow this link to the full article:
Graco: More Vulnerable To Sector Rotation And Slowing Comps Than End-Market Conditions
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