Seeking Alpha: Hurco Delivers Once Again

Companies leveraged to metalworking have seen pretty mixed performance in both their reported financials and stock performance this year. Hardinge (NASDAQ:HDNG) and Kennametal (NYSE:KMT) are both down double-digits on a year-to-date basis (about 22% and 15%, respectively), while MSC Industrial (NYSE:MSM) (a distributor, not a manufacturer) is up more than 12% and Hurco (NASDAQ:HURC) is up close to 50%.

I continue to be bullish on Hurco. The company's announcement in mid-July of a patent on combination 3D-printing and CNC machining certainly got some attention, but the basic underlying business at Hurco is progressing well and I believe that is the more important factor. I do have some concerns about the sustainability of order growth and gross margins, but these shares continue to look undervalued to me.

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Hurco Delivers Once Again

Seeking Alpha: Hurco Virtually Unknown And Meaningfully Undervalued

Typically when a writer talks about a company being "under-followed" it means that there are no analysts from big name firms following the stock, or that what coverage there is from small retail-oriented shops. In the case of Hurco (HURC), though, there is no coverage.

None.

While this is indeed a small company with a very small float, it doesn't deserve to be completely ignored. Hurco is a small player in the global machine tool industry, but its high-spec tools address a legitimate market opportunity. What's more, the company's margins and returns on capital stack up quite well against some of the giants of the sector. While there is a frustrating cyclicality to this industry, Hurco shares look 30% to 50% undervalued on the basis of a long-term free cash flow model.

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Hurco Virtually Unknown And Meaningfully Undervalued

Investopedia: CAT's Costs Rising, But Revenue Rising Faster

This summer saw almost indiscriminate selling across the industrial stock sectors. Companies like Caterpillar (NYSE:CAT), Cummins (NYSE:CMI), Eaton (NYSE:ETN), and Dover (NYSE:DOV) were all swept up in this rush to sell, even though the underlying businesses are so very different. As Caterpillar reminded the Street with its earnings report, the global construction and mining business is still quite healthy and there is plenty of business left to be done.

Solid Third Quarter Results  
Analyst estimates on CAT fell more than 10%, in the weeks and months before the earnings report, and the company did well, relative to those lowered expectations. Revenue, excluding finance, rose 44% as reported, or 11% on a sequential basis, and 28% on an organic basis; virtually all of that growth came from increased volume. Including the finance operations, consolidated revenue rose 41%.

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http://stocks.investopedia.com/stock-analysis/2011/CATs-Costs-Rising-But-Revenue-Rising-Faster-CAT-CMI-VOLVY.PK-CNH-KMTUY.PK-JOYG-RTP1027.aspx