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Is Graco (GGG) a Smart Long-term Buy?

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Alex Smith
·3 min read
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Aoris Investment Management recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Aoris International Fund aims to generate returns of 8–12% p.a. over a market cycle. The portfolio is long-only and highly selective. You should check out Aoris Investment Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Aoris Investment Management highlighted a few stocks and Graco Inc (NYSE:GGG) is one of them. Graco is one of the world's leading suppliers of fluid management products and packages. Year-to-date, Graco Inc (NYSE:GGG) stock lost 11.8% and on May 21st it had a closing price of $46.45. Here is what Aoris Investment Management said:

"Graco is a manufacturer of highly engineered equipment used to mix and dispense fluids, one example being professional paint sprayers. Its strengths include a debt-free balance sheet, longserving management, and leadership positions across most of its markets. It has a long history of GDP+ organic revenue growth and high profit margins.

We expect Graco’s sales and earnings to be materially lower this year than last. Some end markets, such as automotive manufacturing, may take several years to fully recover. We expect Graco to manage its costs prudently during the period of depressed earnings, as it has done successfully in prior downturns, while avoiding cuts in product development or manufacturing expertise that would damage the long-term health of the business. We expect Graco to take market share and emerge from the downturn with an enhanced competitive position."

Graco Inc. (NYSE:GGG)
Graco Inc. (NYSE:GGG)

In Q4 2019, the number of bullish hedge fund positions on Graco Inc (NYSE:GGG) stock decreased by about 5% from the previous quarter (see the chart here), so a number of other hedge fund managers don't seem to agree with GGG’s growth potential. Our calculations showed that Graco Inc (NYSE:GGG) isn’t among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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Disclosure: None. This article is originally published at Insider Monkey.