Most industrial companies, particularly those with shorter-cycle exposure, are seeing impressive rebounds, but I believe there’s more to the Altra Industrial Motion (AIMC) story than just a short-cycle rebound. With automation-enabling products, the company should be set to benefit from ongoing automation of factories and warehouses, not to mention leveraging growth in longer-term opportunities like renewables and aero, with a potential operating leverage improvement kicker as well.
I don’t think Altra is hugely cheap, but then how many industrials can you really say that about? I do see the possibility of beat-and-raise quarters and a stronger up-cycle (which could support higher estimates and multiples on those estimates), but I also see a solid mid-single-digit revenue growth trajectory with margin improvements. I think $70/share is still in play as a nearer-term target, with long-term appreciation potential more in the mid-to-high single-digit range.
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