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Actuant (ATU) a stock with blow-out earnings potential

Actuant Corporation is recently going zigzag in short term and side way in somewhat middle term (December 2010 until today). Many times I was thinking to get rid of that stock since it no longer shows momentum to me, no growth, so why lock my money in it.

Actuant Corporation

But then I try to remind myself – be patient. Once you picked the stock because it showed a great potential for growth and making you money… Another reminder was Netflix to me. Once I bought the stock when it was selling at $55 a share. A few months later I sold the stock, because it went nowhere or it even went down and hit my stop loss. Today Netflix sells for $229.60.

I am trying not to repeat the same mistake. I believe Actuant has a potential for further growth, just it needs time. Once I read, buy a stock and give it time to grow.

So what I am doing? Watching the stock carefully. I am trying to find news and what other bloggers and investors say about the stock and see how it reacts, but most importantly I try to stay calm, sitting and waiting. Maybe Actuant is another Netflix and at the end of 2012 I will be selling three times more than today. Who knows.

So browsing the Internet I found an article about Actuant:

Actuant is a global manufacturer of a broad range of industrial products and systems with operations mostly in the EU and North America. In fiscal year 2010, ending on August 31, the Company made net sales of $1.16 billion with a 10% increase in profits.

Return on equity was a lackluster 3.3% at the end of quarter 1 2011, or the three months ending November 30, 2010. It was 3.23% at the end of FY 2010, and 1.99% at the end of FY 2009.

Actuant is an awfully cyclical company, but we think the upswing is about to go into full-force. Large debt-loads, still at $500M, have made the company lean and efficient, translating into high return-on-invested-capital. There is significant leverage at the company, which can create outsized returns when its end-markets are performing well. We think shares are a buy given the likely growth in its energy segment. Many Actuant actuation and hydraulic products are used upstream to build the machines used by land-based and deep-water exploration and production companies. High fuel prices bode well for more production.
We find coverage to be light on ATU, leaving the potential for positive earnings blow-outs throughout 2011 and 2012.

Read the rest of the story.

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