Thank you Mr. Market for another wonderful buying opportunity!!!
I strongly agree with your post. Clearly, a slow down in the global economies is not good for ECMs at the fringes, but it really doesn't matter. The story with the scale ECMS (FLEXF, JBIL, SLR, SCI) continues to be winning huge hunks of outsourced business. At these valuations, you are buying companies (especially FLEXF, lowest multiple, fastest growing, most earnings upside, but also most misunderstood) at huge discounts to their sustainable growth rates.
ECMs have become strategic extensions of their customers and their moves to virtual organizations. I spoke with a major customer of one of the above mentioned ECMs. They videoconference with each other every morning and are directly linked through their MRP systems. The ECM is a strategic extension of the OEM, and because of the level of investment OEMs now have in their CEMs, switching costs are extremely high. Over time, OEMs will become even more tightly linked with CEMs as part of their overall strategic plans due to ever shortening product lifecycles, time to market pressure, and manufacturing efficiency issues.
My opinion. |
