Graham Corp (GHM)

A bit high priced, but solid numbers.

Positive Earnings Surprise

This company is a growth story as trade increases with China & the rest of asia. Excellent fundamentals and well capitalized for any additional down-turns

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.

Rated 5 stars in CAPS; recent Magic Formula top 30 stock; strong balance sheet.

Low debt, low valuation, five stars, small company screen.

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.

I came across these guys about a year ago. Since then, they continue to strenghthen in my fundamentals screener. Will wait a few more months to put any real money to work on them, but I went ahead and added them to my CAPS picks. Nice profit margins and no debt look very appealing in this economy. A solid buy under $15 in my opinion.

wallstreetbean.com

Tim Hanson, 5*

No debt, strong balance sheet. Good performance in the past couple quarters.

I didn't research this one a whole lot. Could be choppy the next few years depending how heavily they are weighted in the longer cycle businesses (i.e. power generation)

strong fundamentals

I like the rebound potential of this small, quality company.

to test caps

doing research and came across GHM(Oct. 6th 2008 article). Seems undervalued; p/e 7.6 lowest in 7 yrs., 0 debt for 4 +yrs, net profit 17%+, ROE&ROA 20+, just very good numbers across the board. Was funny that an article w/ Warren B. on same day

Strong balance sheet, over 3% insider ownership, strong EPS and Revenue growth over the past 3 years, and ROE over 25%. PE Ratio of only 7.9. Greenblatt Pick.

Good earning growth, low P/E. Up over 50% since I bought it

I closed my previous outperform on this right before the collapse in oil prices brought it down. For the record, I don't even remember how I did that.

RCJ

Ditto RonChapmanJr