This isn’t a particularly good time to be leveraged to residential construction, and while
Franklin Electric (
NASDAQ:FELE) offers better near-term leverage to ongoing demand for irrigation and dewatering, the prospect of weaker residential and
below-ground fueling systems, not to mention ongoing supply/margin challenges, is weighing on the shares. Down about 5% since my last update,
Franklin has more or less kept pace with the broader industrial sector,
and staked out a middle ground between better-performing water stories
like Xylem (XYL) and Lindsay (LNN) and weaker names like Mueller (MWA) and Zurn Elkay (ZWS). The
challenge in approaching Franklin Electric today is balancing out the
near-term end-market weakness with above-average long-term potential, as
well as a valuation that’s not so exceptional compared to industrials
in general, but looks rather good compared to how the market has
traditionally valued water plays.
Read more here:
Franklin Electric Offers Solutions To Long-Term Water Issues, But The Near Term Is More Challenging
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