AMETEK Inc. (NYSE: AME) manufactures
and markets electronic instruments and electromechanical devices in North America, Europe, Asia and South America. The firm's Electronic Instruments Group makes testing, monitoring and calibration instruments for the aerospace, transportation, research, industrial and power markets. Its Electromechanical Group produces motors, blowers, fans, heat exchangers and connectors for appliance, defense, medical and computer applications. This group also makes industrial specialty metals. General Electric (NYSE: GE) and Agilent Technologies (NYSE: A) are major competitors.
The firm pleased investors earlier in the week, when it reported Q1 EPS of 62 cents and revenues of $611.2 million. Analysts had been looking for 58 cents and $585.7 million. Management also predicted Q2 EPS of 61-63 cents (62 cent consensus) and FY08 EPS of $2.47-$2.52 ($2.45 consensus). The CEO cited the company's global customer base, its exposure to long-cycle aerospace and power markets, and the full-year impact of recent acquisitions in support of the favorable guidance.
The stock
popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with five "strong buys", four "buys" and one "hold". Analysts expect a 16% average annual growth rate, through the next five years. The AME Sales Growth rate (20.96%), EPS Growth rate (29.17%), Operating Margin (18.41%), Return on Assets (9.69%), Return on Investment (12.58%) and Return on Equity (21.22%) compare favorably with industry and S&P 500 averages. Institutions own about 83% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $35.79 and $50.78. A stop-loss of $42.00 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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