January 2010: Rofin-Sinar Technologies Inc. (RSTI)
Rofin-Sinar Technologies Inc. engages in the design, development, engineering, manufacture, and marketing of industrial lasers and supplies used for material processing applications in North America, Europe, and Asia. The company offers laser macro products to machine tool and automotive markets for cutting and welding metals applications; and laser marking products to semiconductor and electronics markets for marking integrated circuits, electronic components, smart cards, labels, and car components. It also provides laser micro products for spot welding, fine cutting, and micro structuring applications to medical devices, semiconductor and electronics, photovoltaic, dental, and jewelry markets, as well as for perforating of cigarette tip paper and packaging foils applications. In addition, Rofin-Sinar Technologies offers components for laser industry. It sells its products directly to original equipment manufacturers, systems integrators, resellers, and industrial end-users. The company was founded in 1975 and is based in Plymouth, Michigan.
Comments: I don't have much to say about this pick. Simply, Rofin-Sinar is one of the best companies I own, and I am betting with my own money that the world is not ending and growth for Rofin's products has decades more room to run. Sure, there will be cycles. Sure, the market will rise and fall, but over time this company is a cash cow that dominates its niche. From what I just posted on the HG board for RSTI:
RSTI now trades at ~10x 2008 earnings. Yes, in hindsight that was a cyclical high, but is the market so shortsighted to think that RSTI will never again earn $2+ a share in the future? The average P/E for RSTI from 2000 through 2007 was ~19. Stick that multiple on $2 a share and you've got almost a double.
And so, as with PRPX, I am picking RSTI for the long haul in PebbledsPicks.