Lincoln Electric Hanging In There Despite Weaker Volumes And Decremental Margins

Lincoln Electric (NASDAQ:LECO) shares haven't done as well as other short-cycle names like Kennametal (NYSE:KMT), Parker-Hannifin (NYSE:PH), or Rockwell (NYSE:ROK) over the last three months, but the shares are still up 10% and have outperformed the broader industrial space. Although 13-F filings do suggest that institutions have been trimming back positions, industrials have enjoyed a pretty good run as investors bought back in on the notion that the worst part of the cycle was in sight and focus would soon shift to a return to growth in 2020.

What's interesting to me is that Lincoln Electric has benefited from this same underlying trend, even though the company's weak third quarter results and cautious guidance would seem to suggest that this cycle could further room to run to the downside. Auto sector demand decelerated further and general fabrication went negative for the first point in the cycle - not typically the mark of the near-term bottom of the cycle.

I still like Lincoln Electric quite a lot as a company, and it's still a name that I'd like to own on a pullback (below $80, ideally). Right now, though the market seems quite bullish on the 2020 industrial rebound story, and I'm not comfortable buying into that story, given all of the conflicting data points out there.

Read the full article:
Lincoln Electric Hanging In There Despite Weaker Volumes And Decremental Margins