We came across a bullish thesis on Graco Inc. (GGG) on Substack by Stock Analysis Compilation. In this article, we will summarize the bulls’ thesis on GGG. Graco Inc. (GGG)’s share was trading at $84.71 as of Dec 20th. GGG’s trailing and forward P/E were 29.93 and 27.32 respectively according to Yahoo Finance.
jakob-rosen-jq0RCl1nl9I-unsplash
Graco is a leading manufacturer of fluid handling equipment, specializing in products designed for challenging materials with high viscosities, abrasiveness, and corrosive properties. The company serves a variety of cyclical end-markets, but around 40% of its revenue comes from parts and accessories, which provide more stable demand. Graco’s premium products deliver strong returns on investment for customers by reducing labor, material, and energy costs while improving quality and environmental outcomes. These products represent a small fraction of the total cost for end-users, granting Graco significant pricing power and best-in-class margins, including gross margins above 50% and EBIT margins nearing 30%. Despite its strong fundamentals, Graco’s stock has underperformed recently due to general economic weakness, making its current valuation appealing to potential investors. The company’s exceptional management team and durable position within its niche market further enhance its attractiveness. Given its premium product offering, impressive margins, and stable demand for parts and accessories, Graco presents a solid investment opportunity. With the stock now trading at a reasonable price due to recent underperformance, it offers a compelling entry point for long-term investors seeking exposure to a durable industrial leader.
Graco Inc. (GGG) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held GGG at the end of the third quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of GGG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GGG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.