A broad recovery across multiple end-markets continues to benefit Applied Industrial Technologies (AIT), as does the company’s internal offsets to inflationary pressures and focus on higher value-added product and service mixes. On top of all of this is an attractive automation kicker, as AIT is well-positioned as a design partner and integrator of automation technology for its broad industrial customer base.
I liked AIT back in September largely for its leverage to a continuing broad industrial recovery in 2022 and its underappreciated margin strength and leverage to automation. Since then, the shares have risen around 13%, good for a solid beat versus the S&P 500, a better beat against the roughly flat industrial sector, and better than other distributors like Fastenal (FAST), MSC Industrial (MSM), and Genuine Parts (GPC), but not quite as good as Grainger (GWW).
Although the stock performance has outpaced the underlying improvement a bit since that last article, I still like the story and the stock, particularly as I see more potential beat-and-raise quarters in the future and less vulnerability to shorter-cycle slowdowns (if we get one…). With near-term double-digit appreciation potential and long-term annualized total return potential close to the double-digits, this is still an underfollowed and undervalued name worth considering.
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Applied Industrial Technologies Applying The Throttle To A Good Growth Story
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