A Sharp Swing In Sentiment At Dover Looks Like A Long-Term Opportunity

The vagaries of institutional investor sentiment can drive you nuts, but it can also create opportunities for the patient investor. When I last wrote about Dover (NYSE:DOV) in March of this year, I was concerned about the valuation and the extent to which it seemed like sell-side analysts were scrambling for ways to make the stock appear cheap. Since then, the market has soured pretty dramatically on shorter-cycle industrial names, and Dover shares are down about 20%, more than doubling the broader decline in industrial stocks.

I’m not suggesting that there is no risk to the outlook for Dover in 2023/2024, but I do think the cyclicality/short-cycle exposure is perhaps a bit overstated and that the company isn’t getting credit for its diversification and opportunities for longer-term organic growth. I still believe Dover can generate long-term revenue growth in the neighborhood of 4%, with FCF growth of roughly double that, and while I wouldn’t call Dover “super-cheap” now, it’s a name to consider for investors willing to step in front of poor sentiment in pursuit of quality long-term holdings.

 

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A Sharp Swing In Sentiment At Dover Looks Like A Long-Term Opportunity