We recently initiated our coverage on
), a manufacturing and engineering company, with a Neutral
Colfax Corporation is one of the leading manufacturing and
engineering companies specializing in products and services
related to gas-and fluid-handling and fabrication technology. Its
customer base includes a range of commercial to governmental
clients, in the United States, Europe, Asia, the Middle East and
Growth prospects are bright for Colfax Corporation. Strong end
markets, exposure to emerging markets as well as leading brands
makes this company a long-term winner. The company targets to
achieve organic growth of 1-2% above GDP growth, operating
margins in the mid-teens level and free cash flow in excess of
net income over the long run.
Markets for Howden products are expected to grow roughly 4-6%;
Mining by 6%; Power/Environment by 9%; Colfax Fluid Handling by
5-7%; and Fabrication Tech by 3%.
Besides these, acquisitions have played an important role in the
development of Colfax Corporation. Of all, the acquisition of
Charter in Jan 2012 deserves special mention as it added world
class welding, cutting and automation and air and gas handling
business to Colfax's portfolio. More recently an agreement has
been signed to acquire the Global Infrastructure and Industry
(GII) business of Flakt Woods Group.
However, the impacts of these positives are neutralized by the
presence of some near-term concerns. International businesses
expose Colfax to risks arising from negative foreign currency
translation and geo-political issues, among others. For the three
months ended Mar 29, 2013, Colfax incurred foreign currency
transaction loss of around $2.9 million due primarily to
devaluation of the currency of Venezuela and the change of its
functional currency to Colombian peso.
Also, active competition in the gas and fluid-handling as well as
fabrication technology businesses from both larger and smaller
companies raise our concern.
Other Stocks to Consider
Colfax provided a year-to-date return of 53.4% and currently has
a market capitalization of $5.7 billion. Other companies to look
out for are
EnPro Industries, Inc.
), with a Zacks Rank #1 (Strong Buy) while
DXP Enterprises, Inc.
), each carry a Zacks Rank #2 (Buy).
COLFAX CORP (CFX): Free Stock Analysis Report
DXP ENTERPRISES (DXPE): Free Stock Analysis
GORMAN RUPP CO (GRC): Free Stock Analysis
ENPRO INDUS INC (NPO): Free Stock Analysis
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