Enthusiasm For Yaskawa Electric Seems To Be Running Ahead Of Reality

It’s not news that the stock market is a discounting mechanism, with investors frequently looking past dire near-term conditions and pricing in recoveries well ahead of the actual turns in businesses. We’ve seen that lately in a number of U.S. short-cycle manufacturing stocks (names like Parker-Hannifin (PH) and Rockwell (ROK)), where performance has been driven by evidence that the worst-case scenario is off the table and a late 2020/2021 V-shaped recovery is still in play.

In the case of Yaskawa Electric (OTCPK:YASKY) (6506.T), I think the nearly 30% move since my last update has been too much too soon, as investors seem eager (if not desperate) to buy into a China-centric recovery story. To be clear, I like Yaskawa’s leverage to markets like semiconductors, electronics assembly, and factory automation, but I believe the recovery in the share price is excessive relative to the sort of business recovery I expect to see.

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Enthusiasm For Yaskawa Electric Seems To Be Running Ahead Of Reality