Sun Hydraulics, SNHY, designs, manufactures and markets valves and manifolds for hydraulic systems including electrical and nonelectrical actuated valves, machined manifolds and custom valve and manifold assemblies for use in construction agriculture, mining, industrial and fire and rescue equipment.
The company has grown dividends and profits at a 10-18% pace over the past five years earning a 15-20% return on equity. SHNY’s business suffered dramatically in the 2009 recession; however, it has made a strong comeback which should continue as a result of:
(1) growth in global industrial capital expenditures,
(2) price increases,
(3) exposure to Germany, Korea, China and India.
(1) its international business exposes it to the uncertainties of foreign laws and regulations as well as currency fluctuations,
(2) intense competition.
SHNY is rated B+ by Value Line, it has no debt and its stock yields 1.6%.
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Note: SNHY stock made great progress off its March 2009 low, quickly surpassing the down trend off its July 2008 high (straight red line) and the November 2008 trading high (green line). Long term, the stock is in an up trend (blue lines). Intermediate term is in a trading range (purple lines). The wiggly red line is the 50 day moving average. The Aggressive Growth Portfolio owns a 50% position in SNHY. The stock is on the Aggressive Growth Buy List; but new shares haven’t been purchased for reasons of our much discussed investment strategy. The lower boundary of its Sell Half Range is $49.
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