This is a tricky time to invest in industrials, and Nordson’s (NASDAQ:NDSN) multi-market diversification doesn’t really help now given the growing concerns about end-markets like semiconductors, consumer electronics, short-cycle industrial, and consumer non-durables. Likewise, this tends to be a capex-driven business with relatively little cycle visibility. On the other hand, this is a niche-oriented business with a proven track record of performance, and I like the company’s focus on managing for long-term performance (and not short-cycle optimization).
When I last wrote about Nordson, I wasn’t sold on the valuation, but thought the shares were worth watching. The shares subsequently declined about 10% through June before a sharp rebound and another recent fade that has left the share price more or less unchanged while the average industrial has lost about 10% of its value. I do remain concerned about valuation, particularly in the face of what could be a noticeable decline in capex investment over the next 12-18 months (especially in semiconductors and electronics), but this is definitely a name to keep on a watchlist and reconsider at/below $200.
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