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Timken (TKR) Buys Aurora, Expands Offerings in Bearings Space

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The Timken Company TKR recently purchased all assets of Aurora Bearing Company (Aurora) in a bid to expand its offerings in the engineered bearings space.

Based in Montgomery, Ill Aurora manufactures rod ends and spherical plain bearings for various range of industrial markets, including aerospace and defense, off-highway equipment, racing and packaging. Aurora’s revenues are projected to be around $30 million for the current year.

The latest buyout will aid Timken to serve the global bearing markets more efficiently by enhancing its product range. In fact, the deal supports Timken’s focus on expanding its global leadership position in engineered bearings, while expanding the company’s portfolio into adjacent products and markets.

Timken continues to pursue strategic acquisitions with focus on bearings, adjacent power transmission products and related services. In 2018, the company acquired Rollon, Cone Drive and ABC Bearings. In 2019, Timken completed the buyouts of BEKA Lubrication and the Diamond Chain Company. The acquisition of BEKA Lubrication strengthened the company’s global leadership in the automatic lubrication systems market sector. The Diamond Chain buyout has reinforced Timken's leadership in high-performance roller chains for industrial markets. These acquisitions have fortified the company's global presence in growing markets, particularly China and Europe.

Demand for the company’s products will be robust in the years to come given its diversified end markets, customer and geography, product innovation, as well as engineering expertise. Apart from this, Timken is poised to gain from expansion in the renewable energy sector, which currently generates 7% of the company’s revenues and is anticipated to generate roughly 12% of the total sales in 2020. The global demand for renewable energy is likely to witness a CAGR of around 8% over the next 10 years. The share of electricity generation from renewable is expected to more than double by 2030. Thus, the company is focused on targeted investments in this sector to capitalize on this trend and make it a bigger part of its portfolio in the days to come.

Moreover, Timken is taking actions to enhance liquidity, reduce costs and generate strong cash flow. The company has accelerated and expanded its structural cost-reduction initiatives. These actions will help sustain margins.

Price Performance

The stock has gained 64.4% over the past six months, outperforming the industry’s growth of 34.3%.

Zacks Rank & Other Stocks to Consider

Timken currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Industrial Products sector include iRobot Corporation IRBT, Crown Holdings, Inc. CCK and SiteOne Landscape Supply, Inc. SITE. While iRobot flaunts a Zacks Rank #1 (Strong Buy), Crown Holdings and SiteOne Landscape carry a Zacks Rank of 2, at present. You can see the complete list of today's Zacks #1 Rank stocks here.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. Shares of the company have appreciated 75.7% in the past year.

Crown Holdings has a projected earnings growth rate of 11.7% for fiscal 2020. Over the past year, the company’s shares have gained 29.6%.

SiteOne Landscape has an expected earnings growth rate of 28.6% for 2020. The stock has climbed 56.1% in a year’s time.

Zacks Names “Single Best Pick to Double”

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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

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