To reprint a Napeague Letter article that has appeared on a number of web sites...
Even its name sounds dull...
But dull Companies rarely grow at a 40% annual rate, and they rarely continue growing rapidly in the face of a slowdown in their industry segment. But...they are often undervalued - and Gehl Company (NASDAQ:GEHL) is trading at a price earnings multiple of less than 6, even though its earnings have grown spectacularly during the first nine months of 1999, on top of a strong growth trend over the last several years.
Gehl designs, manufactures, distributes, sells and finances equipment used in the light construction and the agricultural industries, including skid steer loaders, rough-terrain telescopic forklifts, and asphalt pavers. It sales have benefited from the recent legislation which channels gasoline tax proceeds into transportation infrastructure.
Even more exciting... If you are a fan of automobile racing, you may have seen Gehl equipment in use, at Road America, the Grand Prix of Long Beach, and Gateway International Raceway. While the Gehl logo can be found on the cars themselves, and the Company's equipment is used for maintenance purposes, it is most visible as safety equipment in use during the races themselves. Watch for it on television or at your next visit to these tracks.
And most exciting...GEHL is a possible acquisition candidate. This industry segment has experienced significant consolidation during the last year, and there has been some pressure placed on GEHL's management in this regard. I suspect that management might be open to "discussions", but at a price considerably higher than its current market value.
The URL for the Napeague Letter web site can be found by clicking on the "Bob Davis", in blue, at the top of this posting.
Bob Davis
The Napeague Letter |
