Please ensure Javascript is enabled for purposes of website accessibility

3 Great Companies in Small Packages

By Usman Ghani – Sep 11, 2013 at 3:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These three companies have massive potential to grow in the coming months.

Investors should not shy away from cyclical companies just because they aren't good long-term investments. I believe cyclical companies have much to offer, especially when they are coming out of a difficult situation. 

I particularly like small-cap companies in the industrials sector. Chart Industries (GTLS 2.74%)Albany International (AIN 0.66%) and Actuant (EPAC) are three companies that might take off in the coming months. Here is a closer look at their operations.

The next big thing in the LNG world
Chart industries manufactures high-quality engineered equipment that is needed in the production, storage, and end-usage of hydrocarbon and industrial gasses. 

Chart is the leader in high-end equipment that is used for the transfer of liquefied natural gas, or LNG. This is an interesting point about this company because the demand for natural gas as a transportation fuel is increasing worldwide. 

There are many reasons why this change is well under way. Firstly, natural gas is a cheaper alternative to gasoline. Secondly, western countries, such as the United States, are working for greater energy independence to maintain their sovereignty. Chart's LNG transport equipment will definitely see a surge in orders, making market participants increasingly hopeful about the company's future.  

The company is a one-stop solution for LNG-related equipment because it also manufactures heat exchangers, cold boxes, microbulk and satellite LNG storage tanks. These equipments are critical for the functionality of LNG networks. This small company has great potential.

Engineering marvels leading to growth
Albany is an advanced textile and materials processing company. 

The machine clothing segment manufactures custom-designed belts and fabrics that are highly value-added and unique. Therefore, Albany usually has repeat orders from its customers; otherwise, they will have to face high switching costs. Albany claims that it is the world leader in the production of custom-designed fabrics and has little competition in target markets.  

Albany's engineered composites segment manufactures highly advanced composite components that are sold to companies in the aerospace and defense industries. This segment accounts for only 10% of the company's revenues but it packs enormous growth potential. The segment is heavily involved in the development and production of the fan module component for the new leap engines. These engines are being designed for single-aisle airplanes.

Leap engines have the potential to revolutionize the aircraft industry. These engines are 15% more efficient than the regular engines. This is because Albany's fan module components have reduce the weight of these engines by a massive 1000 pounds. Major airlines, such as Southwest, Qantas, and AirAsia, have already started ordering these engines. 

Setting a new direction for itself
Actuant provides highly specialized products and services that are needed in motion control systems and energy companies.

The company's electrical segment has been experiencing a constant decline in its sales. The trend, which started in the fourth quarter of 2012, has continued up till the most recent quarter. Due to the decline in revenues, the segment's operating margins have also decreased. Management has decided to divest its electrical segment and focus on the three remaining segments. 

Actuant expects hefty proceeds against the sale of the segment which it will use to fund acquisitions and return capital to the shareholders. The management wants the company to grow in four areas of operations, including infrastructure, energy, sustainability, and natural resources.  

In latest news, Actuant has acquired Scotland-based Viking SeaTech. Viking serves energy companies that have offshore assets. Actuant believes that it will derive great synergies from the acquisition because of the similarity of operations of the two companies. The company is responding well to the situation and I am positive about its future. 

Foolish takeaway
The industrial sector provides many exciting investment opportunities like the three companies mentioned above. In my opinion, all three of these companies have great potential going forward. I am particularly positive about Chart industries because the geopolitical factors are largely in its favor.

Usman Ghani has no position in any stocks mentioned. The Motley Fool recommends Chart Industries. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chart Industries Stock Quote
Chart Industries
$135.28 (2.74%) $3.61
Albany International Stock Quote
Albany International
$102.66 (0.66%) $0.67
Enerpac Tool Group Stock Quote
Enerpac Tool Group
$24.76 (%)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.