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PeterGibbons
Joined: 08 Jan 2006
Posts: 128
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 Posted: Mon Feb 27, 2006 10:00 pm Post subject: All's Welding for Lincoln Electric |
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All's Welding for Lincoln Electric
Motley Fool
By Stephen D. Simpson, CFA
Mon Feb 27, 2:12 PM ET
Too bad we don't have do-overs in the real world. I'd love to go back to when I last wrote on Lincoln Electric (Nasdaq: LECO - News) and pound the table a little more forcefully. Oh, and buy some shares for myself, too.
A company that makes welding equipment and supplies isn't exactly your latest gee-whiz techno-fad, but I don't care. Sales growth of 20% (12% organic) and operating income growth of 121% are just fine with me. Add in strong cash flow growth and a return on invested capital of nearly 18%, and you've got a great Peter Lynch-type of stock -- boring business, very interesting results.
Two-thirds of the company's business comes from North America, but I'm thinking that we're going to see stronger overseas growth for a while to come. The company is just about to open a new facility in China, and sales growth to India in the past year was up about 100%. I realize China/India plays are a dime-a-dozen, but this is the sort of play I like -- so long as the Chinese and Indians are building more "stuff" (like buildings, machinery, etc.), there will be ongoing demand growth for welding gear.
To be sure, there's no shortage of ways to play industrial growth and activity. You've got conglomerates like Illinois Tool Works (NYSE: ITW - News) or United Technologies (NYSE: UTX - News), process automation vendors like Siemens (NYSE: SI - News) or ABB (NYSE: ABB - News), and parts and equipment players like Lincoln Electric. But in the case of Lincoln at least, you're still talking about a stock that isn't exactly known by everybody on the Street.
Clearly, the stock isn't as cheap as it was just a few months back, but estimates continue to move up as the company resets the bar at higher levels. All Fools needs to conduct their own due diligence, but this one still looks as though it could be one of those diamonds in the rough.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
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Peter Gibbons
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iFinancialAdviser
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| Posted: Tue Feb 28, 2006 12:57 am Post subject: Re: All's Welding for Lincoln Electric |
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| PeterGibbons wrote: |
| ... and sales growth to India in the past year was up about 100%. I realize China/India plays are a dime-a-dozen, but this is the sort of play I like -- so long as the Chinese and Indians are building more "stuff" (like buildings, machinery, etc.), there will be ongoing demand growth for welding gear. |
India is becoming a market rather than just a place to look for outsourcing.
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PeterGibbons
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| Posted: Fri Mar 10, 2006 5:01 am Post subject: |
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Yes, India is involved the world economy a great deal. Outsourcing was huge for them a few years ago, especially in the late 90's. Now it is just about everything.
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Peter Gibbons
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PeterGibbons
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| Posted: Fri Mar 10, 2006 2:31 pm Post subject: |
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That sounds like a lot of fun, even if it is for business.
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Peter Gibbons
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| Posted: Fri Mar 10, 2006 9:55 pm Post subject: |
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| PeterGibbons wrote: |
| That sounds like a lot of fun, even if it is for business. |
70% leisure 30% business. I just want to have an idea of what the country is like.
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