Every once in a while, I get a painful little reminder about the costs of being a cheapskate -- or, depending on your point of view, "value investor."
Take the case of Actuant
Yet I got hung up on the price tag, and in so doing, I missed a run of close to 50% since then. Now, I'm doing all right with my portfolio as it is, but I think most of us could benefit from having another 50%-plus performer in the fold no matter how well our portfolio may be doing, right?
And this business continues to chug along nicely. Reported revenue growth of 17% and organic growth (that is, without acquisitions and foreign currency changes) of 8% were just fine, and the company boosted its operating margins by more than a full percentage point.
Tools once again led the way, with sales up 26% (14% ex-acquisitions and foreign currency) and operating profits up 40%. Actuant's industrial and electrical tools business is generally thought of as a late-cycle industry and certainly seems to be in a sweet spot these days.
While the engineered solutions business was not quite so strong, with sales up 5% (down 1% ex-acquisitions) and operating profit up 3%, I'd expect this business to start doing a little better. The RV business is still weak (mitigating factor -- it makes up only about 6% of revenue), but the company has new business tied to new convertible products from automakers such as Volkswagen, Mitsubishi, General Motor's
Having seen the stock jump 50% since I last said it was a little expensive, I'm a bit gun-shy to call the end of this run. And even up here, it doesn't really look overpriced. So while I'd like to see the company convert some of its variable-rate debt to a fixed rate, that's a minor quibble with an otherwise pretty interesting late-cycle story.
For more industrious Foolishness:
- Danaher: There It Grows Again
- Parker-Hannifin: "Industrial" Isn't a Bad Word
- Actuant Accentuates the Positive
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).