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Kaydon Corp.: Get Your Bearings
6/19/07
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Wednesday, June 20, 2007
If you're looking for a nice steady company, Kaydon Corp. (NYSE:KDN)
could be an excellent addition to your portfolio. This company makes
ball bearings, shock absorbers, sealing rings, and other industrial
products for a wide variety of industries, from robotics to defense to
medicine. Unless you're an engineer you may well never lay eyes on a
Kaydon product, but there's a good chance your life is affected by
Kaydon products on an almost daily basis.
Given the wide range of industries that rely on KDN products, I think this company has the potential to keep growing the way it has been doing for the past couple years. Revenues and operating income have been rising steadily; operating margins were down a bit last year, which the company attributes to the added costs of its efforts to expand into Europe and Asia. Ultimately these costs should generate more profits down the road, as should the company's decision to move one of its main factories from Baltimore to a much less expensive area in North Carolina. While the company expects this move to cost more than $1.6 million, the lower costs and expected efficiency improvements should far outweigh these costs.
Don't buy this company's stock if you're looking for a rapid growth because of great media or a flashy profile; but if you're interested in a slow and steady earner, KDN could be a very nice addition to your portfolio.
And, you never know, Kaydon could end up being acquired at a 30% or greater premium given numerous factors: Lots of cash in the bank, little debt, excellent management, and market dominance in supplying ball bearings to the large scale wind farms internationally.
Type of company: A manufacturer of a wide range of products used in a wide range of industries, with a solid history of growth, low debt, high cash reserves and a phenomenal management team.
Price target: KDN is currently trading near the top of its 52-week range. Its price has been a bit volatile over the last couple years, but ultimately it has grown steadily. I think it's a good pickup now, even above $50. Kaydon could easily reach $80 by mid-2008 -- maybe sooner if it ends up being acquired.
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Kaydon Corp.: Get Your Bearings
Given the wide range of industries that rely on KDN products, I think this company has the potential to keep growing the way it has been doing for the past couple years. Revenues and operating income have been rising steadily; operating margins were down a bit last year, which the company attributes to the added costs of its efforts to expand into Europe and Asia. Ultimately these costs should generate more profits down the road, as should the company's decision to move one of its main factories from Baltimore to a much less expensive area in North Carolina. While the company expects this move to cost more than $1.6 million, the lower costs and expected efficiency improvements should far outweigh these costs.
Don't buy this company's stock if you're looking for a rapid growth because of great media or a flashy profile; but if you're interested in a slow and steady earner, KDN could be a very nice addition to your portfolio.
And, you never know, Kaydon could end up being acquired at a 30% or greater premium given numerous factors: Lots of cash in the bank, little debt, excellent management, and market dominance in supplying ball bearings to the large scale wind farms internationally.
Type of company: A manufacturer of a wide range of products used in a wide range of industries, with a solid history of growth, low debt, high cash reserves and a phenomenal management team.
Price target: KDN is currently trading near the top of its 52-week range. Its price has been a bit volatile over the last couple years, but ultimately it has grown steadily. I think it's a good pickup now, even above $50. Kaydon could easily reach $80 by mid-2008 -- maybe sooner if it ends up being acquired.
hilaryonstocks at 1:39:00 PM EDT Blog about this entry |
Add to del.icio.us | digg this
