Green Shoots May Be On The Way For Applied Industrial Technologies

Conditions are still challenging for industrial MRO and component distributors like Applied Industrial Technologies (NYSE:AIT). While construction-related markets are pretty healthy, manufacturing is still in rough shape and most MRO distributors like Grainger (NYSE:GWW), Fastenal (NASDAQ:FAST), MSC Industrial (NYSE:MSM), and Kaman (NASDAQ:KAMN) are still looking at pretty uninspiring near-term growth prospects.

And yet, there are some reasons to be encouraged. Only about a third of Applied Industrial's markets have been contributing growth, but the last quarter was a little stronger and it looks as though markets like oil/gas and metals are stabilizing and the recent improvement in the metalworking index could be an encouraging sign for manufacturing. The surge in this sector has taken Applied Industrial's stock out of clear value territory, with the shares up 20% since the election and about 40% since just before the last quarter's earnings, but the shares do seem priced for a roughly double-digit total return and the quality of this business makes it a name to consider as a play on a future industrial recovery if and when the sector pulls back.

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Green Shoots May Be On The Way For Applied Industrial Technologies

Seeking Alpha: Two Valuable Lessons From Kaydon's Sale To SKF

I wrote on bearings and velocity control products company Kaydon (KDN) in early March of this year, and I didn't see a lot of value at the time. As the year went on, that call looked worse and worse, as the stock climbed about 18% - well above the S&P 500, and well above industry peers/competitors like Timken (TKR) and SKF (SKFRY.PK). To top it all off, Kaydon announced this morning (September 5) that it had received and accepted a buyout offer from SKF valuing the company at $35.50 - some 45% higher than the price when I thought it looked only about 10% undervalued. So what did I get wrong here, and what can investors do to avoid a similar mistake?

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Two Valuable Lessons From Kaydon's Sale To SKF