Wind power and stimulus funds boost Kaydon (KDN)

"Most recently (October 29) Kaydon reported 3rd quarter earnings of $.48 a share. That was just two cents below the same quarter last year, and beat Wall Street's consensus forecast of $.35 a share by a substantial margin.

"The company's better performance was driven by significantly higher sales of wind energy equipment, which increased 90% over the same quarter a year ago, almost completely offsetting lower sales in other divisions. (Overall sales were slightly lower, at $123.6 million, compared to $126.8 million in the year ago period).

"We believe it was a positive sign that slower sales in its traditional industrial products, as the economy continued to scrape along bottom, were so significantly offset by growing wind-energy sales, almost sure to be a sizable growth industry in coming years.

"The company has made large capital investments to expand its capacity in both wind-energy, and products for the medical industry.

"Company management notes that while $37.5 billion for alternative energy development was included in the government's massive stimulus bill passed in February, the funds and credits are just becoming available to its customers, which should support further growth of that industry in coming quarters.

"If the economy continues to recover, Kaydon's other divisions should also see sales and earnings recoveries.

"The company notes that looking beyond the short-term the longer term outlook for alternative energy will depend on government policies, and development of 'clear, long-term support for renewable energy initiatives'. Our upside target is 46."

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