There are a lot of obvious reasons to avoid investing companies that are laden with debt -- overextension tends to lead to compromises that can hinder growth and impact quality. Keeping debt to a minimum is particularly impressive when considering stocks in the industrial sector because of the intensive costs involved for machinery and production, especially since many of these companies operate throughout the world. Today, we developed a list of industrial stock that have not financed growth by taking on too much debt. Further more, they have all received "Buy" or better ratings from analysts. Take a look at the summaries below to learn more.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can create substantial trouble for the company.
We first looked for industrial stocks. We next screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). Next, we then screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps.
Do you think these stocks offer both value and growth? Use this list as a starting-off point for your own analysis.
1) Gorman-Rupp Co. (GRC)
The Gorman-Rupp Company designs, manufactures, and sells pumps and related fluid control equipment and systems worldwide. Its products include self priming centrifugal, standard centrifugal, magnetic drive centrifugal, axial and mixed flow, vertical turbine line shaft, submersible, high pressure booster, rotary gear, diaphragm, bellows, and oscillating pumps. The company sells its pumps primarily for use in the construction, industrial, water, and wastewater handling fields; for boosting low residential water pressure; for pumping refined petroleum products, including the ground refueling of aircraft; for fluid control in heating, ventilating, and air conditioning (HVAC) applications; for dewatering and flood control purposes; and for various agricultural purposes. It also provides pumps for fire protection, which have applications in sprinkler systems, fire hydrants, stand pipes, fog systems, and deluge systems at hotels, banks, factories, airports, schools, public buildings, and various other facilities. In addition, the company's pumps are used in various products, such as food processing, chemical, photo processing, waste treatment, HVAC equipment, appliances, and solar heating systems, as well as for automated explosives detection systems in airports. It markets its products through a network of distributors, manufacturers' representatives, third-party distributor catalogs, and direct sales. The Gorman-Rupp Company was founded in 1933 and is headquartered in Mansfield, Ohio.
2) Kadant Inc. (KAI)
Kadant Inc. engages in developing, manufacturing, and marketing equipment and products for the papermaking, paper recycling, and processing industries. The company offers custom-engineered systems and equipment, recycling and approach flow systems, and virgin pulping process equipment, as well as individual components, for pulping, de-inking, screening, cleaning, and refining recycled and virgin fibers for preparation for entry into the paper machine. It also provides fluid-handling systems, including rotary joints, syphons, turbulator bars, engineered steam and condensate systems, precision unions, and components and controls that are used primarily in the dryer section of the papermaking process, as well as in the production of corrugated boxboard, metals, plastics, rubber, textiles, chemicals, and food. In addition, the company offers doctoring systems and related consumables for the operation of paper machines; doctor blades for leaning, creping, Web removing, flaking, and coating applications; and profiling systems that control moisture, Web curl, and gloss during paper converting. Further, it provides shower and fabric-conditioning, formation, and water-filtration systems that are used to clean paper machine fabrics and rolls; drain water from pulp mixtures; form the sheet or Web; and filter the process water for reuse. Additionally, the company manufactures and sells biodegradable and absorbent granules, which are primarily used as carriers for agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. It primarily has operations in Europe, North and South America, and Asia. The company was formerly known as Thermo Fibertek Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was founded in 1991 and is headquartered in Westford, Massachusetts.
3) Skullcandy, Inc. (SKUL)
|Industry||Industrial Electrical Equipment|
Skullcandy, Inc. develops and distributes headphones and other audio accessories to retailers in the United States and to distributors internationally. Its headphone products include in ear, on ear, over ear, and gaming headphones. The company also offers speaker docks, mobile device cases, apparel, and other accessories. The company markets its products under the Skullcandy and Astro Gaming, as well as 2XL brands. Skullcandy, Inc. sells its products through specialty, consumer electronics, mass, sporting goods, and mobile phone retailers, as well as through websites and third party distributors. The company was founded in 2003 and is based in Park City, Utah.
4) Orion Marine Group, Inc (ORN)
Orion Marine Group, Inc. operates as a marine specialty contractor serving the heavy civil marine infrastructure market. The company provides marine construction and specialty services on, over, and under the water along the Gulf Coast, the Atlantic Seaboard, the West Coast, Canada, and the Caribbean Basin. Its marine construction services include construction of marine transportation facilities, marine pipelines, bridges and causeways, and marine environmental structures. The company's marine transportation facility construction projects comprise public port facilities for container ship loading and unloading; cruise ship port facilities; private terminals; recreational use marinas and docks; and other marine-based facilities. Its marine pipeline service projects consist of the installation and removal of underwater buried pipeline transmission lines; installation of pipeline intakes and outfalls for industrial facilities; construction of pipeline outfalls for wastewater and industrial discharges; river crossing and directional drilling; and creation of hot taps and tie-ins, as well as inspection, maintenance, and repair services. The company's bridge and causeway projects include the construction, repair, and maintenance of bridges and causeways, as well as the development of fendering systems in marine environments; and marine environmental structure projects primarily comprise the installation of concrete mattresses to ensure erosion protection and the installation of geotubes for wetlands and island creation. In addition, it offers dredging services; specialty services, including salvage, demolition, surveying, towing, diving and underwater inspection, excavation, and repair; and survey services comprising surveying pipelines and performing hydrographic surveys. The company serves federal, state, and municipal governments, as well as private commercial and industrial enterprises. The company was founded in 1994 and is headquartered in Houston, Texas.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/29/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.