Nordson (NDSN) is hardly alone in having a year to forget so far in 2022, with the shares down about 15% since the start of the year and lagging the broader industrial space. While companies like Parker-Hannifin (PH) aren’t great comps from a product line standpoint, they’re both businesses where the stocks tend to struggle once the Purchasing Managers' Index starts to soften, and this has been a common theme across the industrial sector in recent months, exacerbated by increased global economic uncertainty in the wake of Russia’s invasion of the Ukraine.
Industrial stocks got quite expensive, and I do think further derating is a risk, as are downward revisions to numbers if high energy prices and other cost pressures start impacting demand. Nordson won’t be immune to that in the short-term, but I do like the story here, given Nordson’s leverage to semiconductor capex, packaging capex, and growth opportunities in areas like biopharma and EVs. The share price isn’t where I need it to be yet, but this is definitely a name for a watchlist.
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