Finding a strong industrial stock over the past few months is like expecting the Brewers or the Blackhawks to contend for the title in their sports -- theoretically possible, yes, but pretty tough. The upshot of that, though, is that stocks like Parker-Hannifin
Once again, this maker of motion control equipment posted a solid financial performance. Sales for the fourth quarter were up more than 20%, as reported, and about 10% organically. And the company is not just pursuing growth for the sake of growth: Profit margins didn't improve much, but they did improve enough to lead to 23% growth in operating income. While Parker-Hannifin's full fiscal year free cash flow grew about 8%, my calculations show structural free cash flow growth in excess of 12.5%, not to mention a return on capital employed of more than 15%.
Order rates also continue to look pretty good. Keep in mind, though, that industrial order rates are going to be coming up on some tougher comparisons, while the climate/controls business comparisons look a little easier. Assuming that nothing untoward happens, commercial aviation orders should also be pretty solid.
The $64,000 question for industrials in general, though, is how long this above-trend growth can last. After all, interest rates are hiked with the notion of slowing down inflation and tamping down economic activity. Like United Technologies
Parker-Hannifin may not be as safe a bet as General Electric
For more industrial-strength Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).