With most of its end-markets in recovery, Ametek (NYSE:AME) is enjoying a strong rebound, and the company’s focus on innovation within growing niche markets appears to be supporting healthy pricing in a time where many companies are having challenges from price/cost mix. At the same time, management has been getting back to business on M&A, spending around $1.8B so far this year with another $2B potentially to spend.
I like Ametek’s leverage to automation, process monitoring, and aerospace, as I believe these are markets that are likely to generate above-average growth over the next five and 10 years. I also like the asset-light model and the continuous reinvestment in R&D, not to mention the well above-average margins. The hitch is that valuation is not so straightforward, particularly given the significant role of M&A, and while the forward multiple seems a little low relative to what the Street is paying for other companies with less appealing combinations of growth and margins, the entire sector does still look expensive to me.
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Ametek: Well-Placed To Leverage A Broad Multi-Market Recovery
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