With IPG Photonics (IPGP) having entered its downturn a bit ahead of the pack, and management doing a relatively good job of preserving margins, these shares have managed to outperform industrial peers since my last review of the company, while also doing a little better than the S&P 500.
I like IPG's leverage to short-cycle industrial recoveries in 2021, as well as its automation-enabling technology and some potential leverage from reshoring. And of course we are talking about a company with very good margins. What I don't like is the prospect of intensifying competition in China, as IPG's main rival has made it clear that market share growth is its primary focus today. While IPG shares aren't overvalued relative to its margins and cash, it's also not any cheaper than other high-quality industrials.
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IPG Photonics Holding On To Margins But Facing A Battle In China
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