Wind at Its Back by Jim McTague
Summary: Kaydon (KDN) supplies high-margin specialty parts such as bearings and springs to wind-turbine makers, as well as defense, aerospace, medical and electronics companies. Wind-turbine parts are the most intriguing part of its equation: Friedman, Billings, Ramsey analyst Ned Armstrong says revenue from wind-turbine parts could easily jump five-fold, from a present $20 million to $100M. New CEO Jim O'Leary is building excitement. He says he's looking to spend the company's estimated 15%/year cash growth on acquisitions, dividends, and share buybacks. Keybanc Capital Markets' Steve Barger thinks O'Leary will buy a European wind-power manufacturer to increase its current 30% non-domestic sales, although O'Leary says he'd rather grow organically overseas. European companies, such as Spanish wind-turbine giant Gamesa (whom O'Leary indicates he's courting) are moving into the attractive U.S. market, and are likely to favor local component makers; Gamesa currently buys from Kaydon rival Ameron (AMN). At $55, up 28% since mid-February, shares are still reasonable. They could go as high as 66 in the next year, and considerably higher after that.