Shares of Colfax Corporation (CFX), a machinery company, scaled a new 52-week high of $75.37 on Jun 9. This marks a nominal increase from the previous high of $75.18 hit on May 13.
Colfax closed the session at $74.91, reflecting a solid return of 17.6%, year to date. The trading volume for the session was 493K shares. An expected earnings growth rate of 19.5% over the next five years indicates further upside potential for the company.
Growth Drivers
Colfax has huge growth potential given significant contribution from acquisitions. The company acquired Victor Technologies in April this year, for a total consideration of $947.3 million. The acquired assets will complement Colfax’s ESAB business and help its expansion in new markets and applications.
Both the company segments – Fabrication Technology and Gas & Fluid Handling – are in a strong position. The former segment is expected to witness long-term mid-single digit growth due to secular trends and increasing application complexity.
Expecting these factors to boost 2014 results, the company has increased its top-line guidance to a $4.85−$4.99 billion range from the previously projected range of $4.5−$4.625 billion. Earnings per share are expected to be within $2.45−$2.70, slightly up from the prior expectation of $2.40−$2.65.
In the last 60 days, the Zacks Consensus Estimate for Colfax has inched up by 0.8% to $2.60 for 2014 and by 2.6% to $3.21 for 2015. The Zacks Consensus Estimate also reflects year-over-year growth of 27.6% for 2014 and 23.2% for 2015.
Other Stocks to Consider
With a Zacks Rank #3 (Hold), Colfax currently has a market capitalization of $9.3 billion. Some better-ranked stocks in the industry include Gorman-Rupp Co. (GRC), Blount International Inc. (BLT) and Dover Corporation (DOV). While Gorman-Rupp sports a Zacks Rank #1 (Strong Buy), Blount International and Dover Corp. carry a Zacks Rank #2 (Buy).
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