Graham Corp (NYSE:GHM)

CAPS Rating: 4 out of 5

The Company and its subsidiaries are engaged in the design, manufacture and supply of vacuum and heat transfer equipment used in the chemical, petrochemical, petroleum refining and electric power generating industries.


Player Avatar brightsideLP (95.56) Submitted: 9/12/2009 12:47:19 PM : Outperform Start Price: $15.00 GHM Score: -32.43

Profit Margin (ttm):18.26%
Operating Margin (ttm):26.64%
Return on Assets (ttm):22.33%
Return on Equity (ttm):33.54%
Market Cap (intraday):151.77M
Gross Profit (ttm):34.16M
EBITDA (ttm):27.49M
Net Income Avl to Common (ttm):18.08M
Total Cash (mrq):45.38MTotal
Cash Per Share (mrq):4.482
Total Debt (mrq):66.00K
Operating Cash Flow (ttm):11.13M
Levered Free Cash Flow (ttm):12.18M
Book Value Per Share (mrq):6.345

The company was founded in 1936 and is headquartered in Batavia, New York.

Graham Corporation designs, manufactures, and sells vacuum and heat transfer equipment worldwide. Its products include steam jet ejector vacuum systems; surface condensers for steam turbines; vacuum pumps and compressors; various types of heat exchangers, including helical coil heat exchangers.

products are used in a range of industrial process applications comprising petroleum refineries, chemical and petrochemical plants, fertilizer plants, pharmaceutical plants, plastics plants, liquefied natural gas production facilities, soap manufacturing plants, air conditioning systems, food processing plants, and other process industries, as well as power generation facilities, including fossil fuel, nuclear, cogeneration, and geothermal power plants.

This stock is tied heavily on the oil industry and will move up nicely if oil moves up.
However, the company is very small – this allows for tons of upside – but also I advise to buy on dips and to use a limit order.
While the company is about 1.5x my assessment of liquidation value – however there is potential for lots of growth is this niche market that GHM sells to.
Margins are excellent and management has a solid track record. The stock is way too small for any large funds to hold a stake in.

The technicals are sound – as it appears that a breakout is being attempted

Louis Navallier has really pounded the table on this little stock which has likely added to the recent bullish performance.

Earnings are this week – so be cautious buying ahead of the numbers. This stock has a very low float and can move very hard in either direction in no time flat.
Should earnings be sold off – I would use that as an opportunity to purchase shares.

GHM is my fourth largest holding- 5.8% current weight – at a cost of 9.84.
I lightened up on half the position $14-15….but only because it was my largest (non – FSC) holding at the time.
Large cash position and no debt = they will be here if / when oil moves north again. In a rising oil environment – GHM is a wonderfully exciting growth story. Pristine balance sheet.

GHM has also gone through a significant restructuring. I believe this will lead the company to produce significantly higher than historical cash flows….which are already pretty decent.
The risk / reward is still favorable at current prices – and becomes increasingly so $13 and below.

Report this Post 2 Replies
Member Avatar KARABALIS (< 20) Submitted: 10/6/2009 10:32:35 AM
Recs: 0

I want you as my financial advisor.
I have been buying Graham for over two years.
This is a very fine company and you absolutely hit the nail on the head with your analysis.

Member Avatar AlexisMachine (< 20) Submitted: 12/7/2009 8:52:00 AM
Recs: 1

I decided a while ago that I am much too poor to not buy as much of this stock as I can get. When year in and year out a company performs almost exclusively in the top 90th percentile of most general industry, sector, S&P comparisons I can think of no clearer buying signal than that. Nothing succeeds like success, nothing exceeds like excess and successive, excessive successes exceed even the success of the previously unsurpassed success that nothing used to succeed like.

Featured Broker Partners