Seeking Alpha: Lincoln Electric Facing A Tougher Year

Timing can be one of the most frustrating parts of investing. I don't have any real doubt that Lincoln Electric (NASDAQ:LECO) will continue to be a well-run and successful industrial company over the long-term, but I definitely have some doubts about how 2015 and 2016 might go and whether the Street has fully worked the risks into the valuation.

If you are the sort of investor who can see a holding go down 10% to 20% and not worry much about it, this could be a good time to consider Lincoln Electric. With headwinds like a weak oil/gas sector, weak demand in Brazil and Russia, and an uncertain outlook for U.S. exports, estimates may have to come down and that will likely pressure the stock. On the other hand, this is a company with consistent double-digit ROICs, growing share, and growth opportunities in areas like automation and I wouldn't try to get too precise with timing the low point in sentiment as this is a good long-term holding that likely won't hang out in bargain territory for all that long.

Read more here:
Lincoln Electric Facing A Tougher Year

Seeking Alpha: Lincoln Electric Is Mortal After All

Lincoln Electric (LECO) has been an exceptionally well-run industrial company for decades, building itself into one of the world's largest suppliers of welding equipment and consumables. But no company is perfect, and Lincoln Electric posted a surprisingly large miss at a time when rival Illinois Tool Works (ITW) doesn't seem to be sharing in the weakness.

Please click here to continue:
Lincoln Electric Is Mortal After All

Praxair's Success Not Just Hot Air

I have been somewhat obsessed with trying to figure out the real tenor of the economy during this earnings season. Specialty chemical companies like Albemarle (NYSE:ALB) have been strong, coal companies like Peabody (NYSE:BTU) have been reasonably positive and industrials like Dover (NYSE:DOV) have had pretty solid guidance. In fact, the only major notes of caution have been from steel companies like Nucor (NYSE:NUE). 

Industrial gas provider Praxair (NYSE:PX) goes solidly in the camp of "good news for the economic recovery". Although industrial gas companies sign customers to long-term contracts and do not tend to be quite as cyclical as you might immediately think, the volume growth that this company is seeing is nevertheless a pretty strong testament to growing economic activity around the world. 


To read the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/Praxairs-Success-Not-Just-Hot-Air-PX-ALB-BTU-DOV-NUE-ARG-APD0730.aspx

MSC Industrial - Another Good Quarter From A Good Company

Another one of my portfolio holdings reported today. This time it was industrial supplier MSC Industrial Direct (NYSE: MSM). As has often been the case, management's initial guidance proved conservative and the company beat expectations. Nevertheless, the market didn't exactly do handsprings over the results -- probably because the valuation (and expectations) were already high and this is not a management team that is really going to give ebullient guidance that gets everybody fired up.

As an industrial supply company, it probably will not surprise anybody to hear that the 2009 was a very tough year. Consequently, even with a tepid economic recovery, the company is benefiting from some very easy comps.

Revenue this quarter rose 28.5% as reported (to over $450M), and was up 26.5% on a per-day basis. Gross margins weakened just a bit, from 45.9% to 45.5%. Interestingly, about half of the growth came from the company's large customers, with the other half come from the much larger number of smaller companies. To a large extent, this confirms a lot of what I've been seeing about the economy - namely, that the bigger companies are recovering relatively better than the smaller ones.

This is a company famous for efficient management, and operating income jumped about 56% to 70.4M. As you might imagine, the results of this growth filtered on down through the rest of the income and earnings lines.

Cash flow was not great in this quarter, but that does not worry me. First, quarter-to-quarter cash flow is just not something I worry about because there are so many eccentricities and timing artifacts that create problems. Second, as part of the recovery in business, I expected to see higher accounts receivables and inventory levels and that does not help operating cash flow.

Management gave more of its customary guarded optimism with the release. Earnings guidance was modestly positive and I would expect the company to outperform those expectations once again. So, to the extent that the company has control over its business (which is tenuous given how reliant it is upon overall manufacturing and economic health), I feel pretty good about the rest of this year.

As I said, it is not a cheap stock and it can be pretty volatile. I figure that these shares are worth something in the vicinity of $58/share. That number could go up a bit as I update in the wake of this quarter, but I doubt it will go up much. So, with all that in mind, I'm happy to hang on for now.

Other similar companies like W.W. Grainger (NYSE: GWW) and Applied Industrial Technologies (NYSE: AIT) are certainly cheaper, and maybe some would argue that Grainger is just as good. WESCO (NYSE: WCC) is likewise a great play on economic recovery, but the stock has already had a hell of a run and is not exactly dirt-cheap. I suppose you could also throw Airgas (NYSE: ARG) and Anixter (NYSE: AXE) into the analysis, but they do not excite me after the runs they have already had. All in all, I'd rather pay up for MSC, but WESCO could still be interesting if you think the economy will avoid a double-dip.

Disclosure - I own shares of MSC Industrial