About three months ago, I complained that a focus on miserly value occasionally blocked me from gains like that which Actuant (NYSE:ATU) saw in the latter part of 2005. On the flip side, I can now say that adhering to that same miserly value philosophy shielded me from paying too much for the stock and suffering from the rather sharp drop of the past month.

To say the very least, the market did not take kindly to the news in the earnings release from this smallish industrial company focused on electrical tools and hydraulic systems. The actual earnings themselves weren't so bad. Revenue rose about 11% (net of acquisitions and currency), margins expanded nicely, and the company showed growth in free cash flow on both a quarterly and year-to-date basis.

The "yeah, but" was in the guidance. The midpoint of the company's guidance for next year was about 6% below the pre-existing consensaguess. And so, naturally, if you're going to come up 6% short, your stock needs to fall about 18% that day. My, those markets are efficient, huh?

I realize that next year will be a bit more challenging, and I have to confess a little surprise that other people were so surprised by it. After all, while the company doesn't get a huge amount of revenue from its RV and truck businesses, both of those are weak now and likely to be weak next year (particularly the truck business). And who knows what the tool business will look like later this year and into next. Whether it's housing, energy, or general economic conditions, folks are more nervous about this sector in general.

The only good thing about 18% single-day drops is that they can produce longer-term values. The company has moved past product resets at retailers like Lowe's (NYSE:LOW) and is still looking for year-on-year growth next year. More cautious investors might want to focus on the likes of Black & Decker (NYSE:BDK), Parker-Hannifin (NYSE:PH), or Dover (NYSE:DOV) (none of which, frankly, are all that comparable to Actuant), but this could be an idea that's worth keeping an eye on.

For more industrious Foolishness:

Does your miserly focus on value send you in search of deep discounts? Philip Durell and his merry band of Fools at the Motley Fool Inside Value newsletter service are standing by, ready to lend a hand with the valuation scenarios. Try out a 30-day guest pass to see whether bargain-hunting is right for you.

Fool contributor Stephen Simpson but has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).