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Graco Inc. Message Board

  • steve_382n steve_382n Jan 20, 2013 7:12 PM Flag

    Graco mentioned in Barron's this week

    OK, I am talking to myself and the robot spammers, but in this weeks Barron's in an interview with Mario Gabelli he recommended Graco.

    Graco [GGG] was founded in 1926. The stock is $53. There are 60.7 million shares outstanding. Net debt is $570 million. The company makes equipment to apply foam on drilling rigs, and products for painters. It uses a razor and razor-blade model [applications are sold separately from applicators] and is a great cash generator. Graco tried to acquire a company from Illinois Tool Works [ITW] for $650 million, but the Federal Trade Commission gave it a hard time. So it had to sell a part of the ITW acquisition. Revenue is tied to the housing market, which has a long runway. There are a lot of ways to make money from housing. This is a side-door play. Pat McHale, who runs Graco, is terrific. The company could earn $2.20 a share for 2012, down from $2.32. Earnings could double in three or four years.

    Schafer: How so?

    Gabelli: Through a combination of growth in the housing market and the absorption of some costs tied to the Illinois Tool Works acquisition. Also, Graco buys back stock from time to time, and introduces product innovations.

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