Almost all of Lincoln Electric’s (NASDAQ:LECO) markets are in recovery mode now, and that is driving exceptional volume growth as well as impressive price leverage opportunities and operating leverage. Better still, Lincoln’s upturns typically last at least two years, so it may not be too late to ride some of the upside in this high-quality industrial.
The valuation argument is tricky. The shares are up about 25% since my last update, more than doubling the return of the broader industrial sector and outperforming quite a few high-quality industrials. I said in my last article that the prospective long-term annualized return was lackluster, and I still believe that to be true, but it’s also true for virtually every quality industry. The question, then, is whether an investor is comfortable ignoring a steep-looking near-term valuation and investing on the basis of assuming that the capex cycle will drive at least two years of improving and better-than-expected growth.
Read the full article at Seeking Alpha:
No comments:
Post a Comment