Money Trees
Deep value, growth, momentum

Magnetek: Levered Equity Provides Compelling Long Opportunity


Magnetek (NYSE:MAG) shares still offer big-time upside potential. There are many things I like about the stock, several of which include:

  • Industry leader that continues to grow its market share: MAG benefits from both secular and cyclical macro trends and is well positioned in growing end markets.
  • Cash flow machine with adjusted free cash flow margins breaching 15% and approaching 20%.
  • Levered equity returns as interest rates revert to historic norms.
  • Buyout offer from private equity player rejected at $15/share offer price (representative of ~7% in premium at the time).

I profiled the company back in May when shares were trading in the $14.50 area, and they are up 21% since. I believe the stock is still...

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