I remember it well . sitting there mulling over whether I should buy MRO (that's maintenance, repair, and overhaul) distributor MSCIndustrial
For its second quarter, sales rose 13%. Somewhere between 3% to 5% of that came from price increases, and what's a little unusual about this quarter is that it's the first time in years when the large accounts drove the sales increase. While margins eased off slightly from the first quarter (when there were some rebates that helped boost the gross profit), there was still solid year-over-year improvement, and both operating income and net income were up sharply.
While you might imagine that businesses related to the auto industry are having a tough time, Applied Industrial is experiencing good growth in industries like lumber, fabricated metal, chemicals, and general manufacturing. These are good days for manufacturers, and because the company is still largely a pure play on manufacturing activity, that's certainly good news for shareholders.
Management here has done a very good job of enhancing profitability. While the company doesn't boast the operating margins of a Grainger
Like I said before, I looked at both Applied Industrial and MSC and chose the latter. I preferred MSC's mail-based system (as opposed to a store-based system) and the higher return on capital. But that said, Applied Industrial is far from an inferior company, and so long as economic activity stays positive, there should be plenty left in its toolbox.
For more industrial-strength Foolishness:
Fool contributor Stephen Simpson owns shares of MSC Industrial, but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares).