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Strategies & Market Trends : Value Investing
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To: Graham Osborn who wrote (55432)6/8/2015 11:43:49 AM
From: E_K_S  Read Replies (1) of 78719
 
Graham Corporation (GHM) -

Small market cap at $210mln and only 10.13mln shares outstanding. Look's like the CFO just sold quite a few shares 6/5/2015:

Jeffrey Glajch, Graham Corporation (NYSE:GHM)’s insider Sold 5,754 Shares

Graham Corporation: Ready to Grow
This was the first time to our knowledge that management provided a time frame for achieving its goal of $200 million in sales, which if reached and with benefits from expected pricing and operational leverage could result in $2.50 to $3.00 in earnings per share (up from an expected $1.30 in fiscal year 2015).
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Their business is very cyclical w/ 3-5 year cycles . Current (16.5) and forward (26.5) PE's a bit high but s/d be lower as market cycle peaks. I would like to see the revenue contribution (by products & regions) for the next few quarters from their acquisition Energy Steel & Supply.

My recent Buy in Ampco-Pittsburgh Corp. (AP) is a similar sector play but exposed to a broader market (not just oil/energy).

GHM is generating profits, covers their dividend and management says they have a a road map to grow their revenues to $200mln/year, it's still a bit too concentrated in the oil service sector for me. They also generate about 50% of their revenues from outside the US which may/could be impacted by a strong $US. That said, I do like their move into alternative energy containment vessels specifically those contracts/services brought by Energy Steel. If they could land a service contract w/ Lockheed and/or GE to help design/develop specialty parts for this new industry (ie mini nuclear generating pods), I would have much more interest. Therefore, I would watch future developments there. Also, their sales & engineering office in China could generate some huge service contracts that could be a big positive for the company.

The company is still quite small, so the needle could be moved by any one region/product in the mix especially from any new long term service/development contract.

It's a pass for me now but on my watch list.

EKS
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