Weak Economy but Strong Industrials…How? ADT Corp (ADT) and More

Gardner Denver, Inc. (NYSE:GDI)

The buy side consensus seems to be too negative on Gardner Denver. Last month, Jim Cramer said that the company doesn’t have good fundamentals. However, the sell-side thinks the stock could outperform given:

(1) The catalyst of European cost cutting announcement, boosting margins;

(2) The capital allocation improving (buyback likely to be extended);

(3) A possible corporate action (ValueAct are pushing for a sale; peers like Robbins & Myers, Inc. (NYSE:RBN) are being acquired).

On Feb. 11, MKM partners upgraded the stock and stated the following:

“We believe an improving macro environment, a positive 4Q preannouncement and signs of stabilization in pressure pumping should point to upside in valuation. In light of improving fundamentals and the recent strength in the shares of GDI’s peers, the Board may look for more than the $75-$80 per share offer that has been widely reported in the media.”

Therefore, Feb. 15 will be an important date for GDI’s investors.

Foolish Bottom Line

It is interesting to note that despite a sluggish macro environment, some industrial stocks have shown a remarkable rate of capital appreciation, and some are still set to grow due to stock-specific reasons.

The article Weak Economy but Strong Industrials…How? originally appeared on Fool.com and is written by Masam Abbas.

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