Results are certain to get worse from here, but Atlas Copco’s (OTCPK:ATLKY)
relatively strong performance in the first quarter underlines part of
the reason why I love this company and why investors continue to bid it
up to such a generous premium over typical industrial companies. While
Atlas is by no means immune to the coming recession, the company has
out-executed its competition over the years and continues to find new
avenues of profitable growth in which to reinvest.
Of
course Atlas isn’t cheap now. Even during the period of peak panic in
March it was barely cheap by normal valuation metrics. If you’re waiting
to buy Atlas when it’s inarguably cheap, you’re likely in for a long
wait. I’m not suddenly turning into a “ignore valuation” type of
investor, but there’s a point where you have to bow to reality, and the
reality is that Atlas Copco is going to get a benefit of the doubt
(lower implied discount rate/higher valuation) so long as it continues
to execute at peer-leading levels.
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Atlas Copco Offers Premium Performance At A Premium Price
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