Seeking Alpha: Sun Hydraulics May Be Special, But The Valuation Isn't

With Sauer-Danfoss (SHS) having accepted a buyout offer from Danfoss A/S, I will soon need to replace a stock in my portfolio, and Sun Hydraulics (SNHY) is a name that I've had my eye on for some time. While many companies talk about valuing their employees and seeking innovative solutions for their customers, Sun seems to actually do it. Unfortunately, the qualities of this company have not gone unnoticed, and Sun is not exactly a bargain bin option.

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Sun Hydraulics May Be Special, But The Valuation Isn't

Seeking Alpha: Sauer-Danfoss Should Be Past The Worst

Industrial companies have been reporting pretty grim results for the 2012 calendar fourth quarter, and guidance for the first half of 2013 isn't looking particularly strong either. The market being what it is, though, investors are looking past these current difficulties and already baking in their assumptions of a solid recovery. As Sauer-Danfoss (SHS) was one of the first ag/construction equipment companies to see significant weakening, I think the company's relative stability could be a sign of improving conditions, and I think there is still room for these shares to go higher.

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Sauer-Danfoss Should Be Past The Worst

Investopedia: Danfoss A/S Once Again Tries To Get Sauer-Danfoss On The Cheap

I can't fault Danfoss A/S for trying to join in the spirit of the Christmas shopping season and score a sweet bargain, but I have a feeling that this privately-held Danish company is going to have to do better if it wants to make Sauer-Danfoss (NYSE:SHS) all its own.

The Deal That May Be

Sauer-Danfoss shares spiked the afternoon of November 28 after an SEC filing revealed that Danfoss A/S CEO Niels Christiansen sent a letter to Sauer-Danfoss' board offering to buy the shares it does not already own (about 24% of the outstanding total) for $49 a share - a roughly 24% premium to the close on November 27. Not surprisingly, the deal offered is an all-cash deal for Sauer-Danfoss shareholders.

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http://www.investopedia.com/stock-analysis/2012/Danfoss-AS-Once-Again-Tries-To-Get-Sauer-Danfoss-On-The-Cheap-SHS-PH-ETN-HON1129.aspx

Seeking Alpha: Can Sun's Superiority Send It Higher?

Although 2012 has been a tough year for industrial names, hydraulic component players like Eaton (ETN), Parker-Hannifin (PH), and Sauer-Danfoss (SHS) still post quite solid 12-month returns relative to the S&P 500; about 40% higher on average. That makes Sun Hydraulics (SNHY) a notable and surprising laggard, with the trailing year's return about 40% lower than the market. Sun stands out as a high-quality and differentiated industrial small cap, but producing an appealing fair value target takes some effort and above-average optimism.

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Can Sun's Superiority Send It Higher?

Investopedia: Will A Change At The Top Shift Sauer-Danfoss's Trajectory

It has been a few months since I last wrote on small industrial company Sauer-Danfoss (SHS), and the interim has not been especially kind to the company. With large exposures to China and Europe, but without the same breadth of products and depth of customer relationships, Sauer-Danfoss has seen a much larger setback in revenue and profits than larger rivals like Eaton (ETN) and Parker Hannifin (PH) and OEMs like Caterpillar (CAT) or Deere (DE).

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Will A Change At The Top Shift Sauer-Danfoss's Trajectory?

Seeking Alpha: Reasons For Relief At Eaton, But Tougher Times Still Ahead

Eaton (ETN) isn't necessarily the best industrial company that investors can buy, but it's a quality name that investors ought to reconsider during the lulls in the cycle. With good long-term fundamentals in most (if not all) of its target markets and reasonable leverage to emerging market growth, Eaton should be a reliable "market growth-plus" story for the foreseeable future.

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Reasons For Relief At Eaton, But Tougher Times Still Ahead

Seeking Alpha: Caterpillars, Deer(e)s, And CNH - Oh My

Cyclical industries have this way of making investors look stupid, as the "it's different this time" crowd goes hand-to-hand with the "doom is just around the corner" contingent. Luckily for CNH Global (CNH) investors, the company is so well-diversified around the globe that a slowdown in one area can be offset by stronger conditions in another.

Like Deere (DE), CNH management has been a little conservative/cautious of late, and sell-side analysts seem to be getting a little more nervous about the health of the North American farm equipment market and the global construction equipment market. That said, CNH's overseas position is intriguing, particularly if management can start to execute better.

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Caterpillars, Deer(E)s, And CNH - Oh My

Seeking Alpha: Sauer-Danfoss Pummeled, But Not KO'ed

I have a habit of buying small stocks that are barely followed by sell-side analysts, as I think you can find the most inefficiently priced stocks where there are fewer people watching. The downside to that philosophy is above-average volatility, as Sauer-Danfoss (SHS) is ably demonstrating today. While investors were disappointed by the sharp reversal in momentum at this commercial vehicle supplier, the long-term growth picture still supports a substantially higher price.

Pretty Dismal Fourth Quarter Results
To management's credit, the results reported for this quarter were consistent with the lower end of the range they gave with third quarter results. Unfortunately, with no analysts following this stock (apart ValueLine), there really wasn't a consistent voice out there reminding investors of the potential slowdown this guidance implied.

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Sauer-Danfoss Pummeled, But Not KO'ed

Seeking Alpha: Can Altra Holdings Become A Clutch Performer?

Not only do I like industrial companies in general, but small industrial companies are near and dear to my heart. Played right, they can be surprisingly lucrative stock picks with much less of the risk that often goes with small technology or healthcare names.

The question for this article, then, is whether Altra Holdings (AIMC) merits a spot in the portfolio of growth-inclined investors.

An Annoying Reset To End The Year
The Altra Holdings case doesn't start off especially strong, as though revenue rose 11% organically in the fourth quarter, the company missed earnings estimates by a significant margin.

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Can Altra Holdings Become A Clutch Performer?

Seeking Alpha: Sauer-Danfoss Still Looking Sweet

Although it was an ugly summer for off-road vehicle components maker Sauer-Danfoss (SHS), the company nevertheless ended 2011 as one of the relatively few industrial stocks to post double-digit gains. While OEM order rates for off-road equipment like wheel loaders, bulldozers, harvesters, and so on have started to taper off a bit, there is a significant difference between “slow” and “stop” and Sauer-Danfoss looks poised for another strong year in 2012. With minimal institutional support, Sauer-Danfoss is off the radar of many investors, but the value here still merits a serious examination.

Off-Road Still On Track
Sauer-Danfoss is basically in the business of making components for off-road vehicles. Sauer-Danfoss builds the transmissions that make machinery like excavators, combines, and trucks go, as well as other components like steering units, valves, pumps, controls, and motors that allow these vehicles to operate the buckets, shovels, headers and so on that represent the “business end” of the vehicle. While there is an after-market component to the business and Sauer-Danfoss can work with custom orders and retrofits, a lot of the company's sales are to the OEM manufacturers like Caterpillar (CAT), CNH (CNH), Deere (DE), Sandvik (SDVK.PK), and so on.

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Sauer-Danfoss Still Looking Sweet

First Quarter Performance

This was an odd opening to the year. Through the first two months of the quarter, I was down a bit relative to the S&P 500 and the Nasdaq. March has been a real lion for me, though, with stocks like First Cash (FCFS), Sauer-Danfoss (SHS), ISTA (ISTA), and TomoTherapy (TOMO) all really coming through for me in a big way.

First quarter 2011 -
Portfolio A : +12.6%
Portfolio B: +5.4%
Combined portfolios: +10.1%

S&P 500: +5.4%
Nasdaq: +4.8%
Russell 3000: +5.9%

Disclosure - I own shares of First Cash Financial, Sauer-Danfoss, ISTA Pharmaceuticals, and TomoTherapy

Seeking Alpha: Sauer-Danfoss Thriving In Relative Obscurity

Investors will notice a name on the top gainers list today that they probably do not recognize. Hydraulic and electrical component maker Sauer-Danfoss (SHS) is getting its day in the sun on the back of a surprisingly strong fourth quarter and solid guidance for the next year. For better or worse, though, this company has virtually no coverage and no analyst support – perhaps explaining why it is one of the relatively few under-priced industrials with exposure to markets like mining, construction and agriculture.

Better Growth Across the Board
 By almost every metric, Sauer-Danfoss posted solid results for the fourth quarter. Sales jumped 54% as reported, or 56% on a currency-neutral basis. Sales rose 53% in the Americas, 42% in Europe, and doubled in Asia. Looking at the results by market segment, “propel” saw growth of 71%, “work function” saw growth of 49%, and “controls” saw growth of 33%.

To put that in perspective, Caterpillar (CAT) reported 62% sales growth in its latest quarter, while Deere (DE) revenue rose 27%, while component companies like Eaton (ETN) and Parker Hannifin (PH) saw growth of 17% and 22%, respectively.


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http://seekingalpha.com/article/256310-sauer-danfoss-thriving-in-relative-obscurity