Dealmaker’s Diary: Earnings, Income and Momentum Growing for This Global Manufacturer

Alpesh Patel|March 28, 2024

Tech stocks have been on a tear for quite some time. But there’s far more to the sector – and a lot more stocks worth examining – than Nvidia (NVDA) and the other big names.

The stock we look at in today’s video is proof of that.

It’s a smaller company that meets many of the requirements of my proprietary system. Its market cap is only about half-a-billion dollars.

However, it just generated a record $45 million of cash from operations in 2023…

This lesser-known, Nasdaq-listed stock is now showing us the signs of growth we like to see.

In fact, earnings, income and momentum are all mounting. Shares are up 50% from the stock’s 2022 lows… and there’s reason to believe there is still room to run.

So, now is the perfect time to look at this global manufacturer.

Get all the details on the company – including the ticker – in my latest video.

Click on the image below to check it out.

 

Transcript

Hi, friend.

So for this week’s Stock of the Week. I’ve gone for one outside of the conventional technology companies – which some fear they might be a little bit overboard. And as you know, with stock of the week, they tend to be ones which whilst I’m looking at the same criteria I do for my GVI research newsletter, they probably wouldn’t quite make it into that list.

But they tick all the boxes so they can sometimes be slightly higher risk as a result, yet they are interesting companies worth looking at. Allient (ALNT) is one of them. It is a NASDAQ company, a NASDAQ, I think, still as an index as a way to go to the upside.

It’s a global engineering and manufacturing company.

And it works across several industries and sectors aerospace and defense, medical, agriculture, industrial vehicles, and electronics as well. Small company. The market cap is only about half a billion dollars.

However, it generated a record $45 million dollars of cash from operations in 2023. So It’s suddenly going in the right direction and growth figures have been there. Let’s look at some of those figures. If I look at the Growth-Value-Income (GVI) rating, which remember is my proprietary score for valuation, revenue growth, dividend yields, and then weighing those and scoring out of ten. It’s got a nine out of ten. Anything the seven or above I treat as eligible to be, worth considering. The forecasted price to earnings at a multiple of fourteen is neither expensive nor cheap for an engineering related company or manufacturing company.

It means you’re paying fourteen dollars for every future, forecasted dollar of profits, The cash return on capital invested a bit lower than I would want or, like, it is 6.6%. Remember, this Is a Goldman Sachs Wealth Management formula, which is used for their wealthiest clients. There’s videos to explain that around this one.

Sortino lower than I’d ever have for a GVI stock. Volatility blow twenty percent, which in a market, which could see some turbulence, given that it’s only been going upwards, the whole market, I mean, I think volatility under 20% will be something which I would prefer.

Now, The stock has bounced off its 2022 lows of $22. It’s up some 50% since then. There seems to be quite a bit of volatility as you would see in the stock over recent, last couple of years, but some stability certainly since about the last quarter of last year, and a nice upward move from twenty five to thirty three. And the idea is that that momentum should carry forward.

It’s not guaranteed by any means because the company does tend to have these sharp pullbacks after risers and then goes back up again. So it’s the kind of company where you’d have a wide stop loss and the direction of travel, we’d really be aiming for it to reach its 2023 highs of just shy of $45. That’d be the idea. Thank you very much.

I hope you enjoyed the insight. One closing piece of bad news regarding the company – on a discount cash flow, it is substantially overvalued, but of course discount cash flows are susceptible to wild movements.

So thank you very much and good luck with the markets.