Applied Industrial Technologies: Still An Underappreciated Industrial Growth Story

I can’t really complain about the performance of Applied Industrial Technologies (NYSE:AIT) since my last update, as this leading distributor of fluid power, power transmission, and flow control components has continued to outperform the broader industrial sector. Up about 18% over that time, AIT has handily outpaced suppliers like Parker-Hannifin (PH), other distributors like Fastenal (FAST), and most of its customer base as well.

It’s certainly true that trees don’t grow to the sky and AIT cannot maintain a high-teens revenue growth pace for much longer. Still, the company remains strongly leveraged to the ongoing “catch-up cycle” as companies work to deliver on their backlogs, as well as longer-term secular growth drivers like automation and decarbonization. Share price outperformance has shrunk some of the discount to fair value here, but I believe this remains a well-run and under-known small/mid-cap industrial with above-average growth potential.

 

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Applied Industrial Technologies: Still An Underappreciated Industrial Growth Story