Efficiency Initiatives, M&A, And Cycle Have Boosted Columbus McKinnon

Columbus McKinnon (CMCO) is off the beaten path, and at around $1.3 billion in enterprise value it is certainly a smaller industrial, but this company is a leading player in material handling products like hoists, industrial cranes, controls, and actuators. Not only has the company gotten a noticeable boost in recent years from acquisitions and cyclical recoveries across a range of industrial end-markets, but the company has also done an excellent job of executing on the (relatively) new CEO’s vision for a leaner, more dynamic Columbus McKinnon.

Although the shares have outperformed the industrial sector this year (and significantly outperformed over the past two years!), this may not be the end of the opportunity. I’m a little nervous about projecting high single-digit to low double-digit FCF margins for a business like this, but it’s hard to argue with the margin improvements that the company has already made, as well as the opportunities in product simplification and R&D re-investment.

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Efficiency Initiatives, M&A, And Cycle Have Boosted Columbus McKinnon

Columbus McKinnon Poised For An Industrial Recovery, But So Is The Street

This may be obvious to many readers and investors, but timing is an invaluable part of the investment process. A couple of months ago, Columbus McKinnon (NASDAQ:CMCO) would have looked like a significantly undervalued and overlooked play on a general industrial recovery, not so much an underappreciated leader in the material handling market with a catalyst from increasing automation.

Fiscal second quarter earnings were quite encouraging regarding that recovery, though, and the recent Presidential election only strengthened investor conviction, taking these shares up almost 60% since the day before second quarter earnings. I do believe that recovery will come, though, and the recently-announced deal for Konecranes' (OTCPK:KNCRY) STAHL business should benefit revenue, margins, and cash flow in the years to come.

With an underlying expectation of mid single-digit revenue growth and high single-digit cash flow growth supporting a fair value of about $28, Columbus McKinnon still has some appeal, but it would definitely be a name to watch for a pullback if this rally hits the rocks.

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Columbus McKinnon Poised For An Industrial Recovery, But So Is The Street

Seeking Alpha: Terex Needs More Balanced Growth To Head Higher

It was almost a year to the day when I last wrote on material handling company Terex (TEX). I was positive on the stock at that time, and the stock did outperform over the past year (up nearly 27%). Like so many other industrial/heavy machinery names, though, I find myself asking if investors have been too eager to factor a strong global economical recovery into the numbers. While I still think Terex has a good business and a solid management team, a lot seems to be riding on businesses that have a lot of exposure to the still-feeble European economy.

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Terex Needs More Balanced Growth To Head Higher

Seeking Alpha: Manitex: Are These The Early Days Of An Exciting Industrial Equipment Story?

Investors are usually wise to be cautious about buying into growth stories predicated on mergers and acquisitions, but Manitex (MNTX) looks like a different sort of story, and one that may end well for patient investors. Eschewing more commoditized areas of the material handling market, Manitex has built a name for itself in heavy lift boom trucks, rough terrain cranes, and rough terrain forklifts, and is now looking to the fast-growing intermodal market as another potential avenue for growth.

While the company has plenty yet to prove with respect to margins and return on capital, the risk-reward balance here seems intriguing for more aggressive investors. I believe Manitex can not only drive improved operating margins from greater fixed asset turnover and utilization, but also continue to execute selective one-off deals in attractive markets while continuing to develop products tailored for markets with specialized needs. In short, I see this as both a revenue growth and margin improvement that the market presently undervalues (or may not even be aware of).

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Manitex: Are These The Early Days Of An Exciting Industrial Equipment Story?

Investopedia: Not All Shipping Is Sinking

Maybe it seems obvious, but a tanker ship is nothing like a dry bulk carrier, and both are nothing like a containership. Oh true, they are all very large boats and they all operate on the same underlying economic basis - ship supply, demand for carriage, day rates, contract coverage and so on. When it comes right down to it, though, it sometimes seems like there are more differences than similarities. (For a quick refresher on the state of the industry, check out Has Dry Bulk Shipping Reached Low Tide?) 


Lately, the performance and expectations of dry bulk carriers has been underwhelming. Look at the container shipping market, though, and the picture is quite a bit different. Investors here have seen largely a strong run from 2009 and many of these companies throw off good dividends as well. What's more, with a different sort of leverage to global trade than the bulk carriers, they could represent a worthwhile balance in a portfolio.

Have Boat, Will Travel
Containerization was a major development in the shipping world, allowing carriers to become far more efficient in loading, carrying and unloading cargo. Better still, a container ship can carry almost anything - as long the goods fit into a standard container, it's not a problem. So whereas a dry bulk company like DryShips (Nasdaq:DRYS) or Genco (NYSE:GNK) will devote an entire ship to iron ore or grain, a containership can holds hundreds of different kinds of cargoes at the same time.

Unfortunately, it has not always been easy to trade containership stocks in the United States. Most of the major players - Maersk, Mediterranean Shipping, CMA, Evergreen - are either private or traded on foreign exchanges. But there are still a few names that investors can play, such as Paragon Shipping (Nasdaq:PRGN), Seaspan (NYSE:SSW), Euroseas (Nasdaq: ESEA) and Danaos (NYSE:DAC). Better still for many investors, the first three pay dividends and Paragon and Euroseas have rather attractive yields. (For more, see Dividend Facts You May Not Know.)


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