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Looking for a stock for the recovery?

September 7th, 2010

Are we already out of recession? Are we on a slow path of recovery? Are we facing a double dip recession or are we heading into a depression? Those are the most discussed questions these days!

But if we think positive and want to position ourselves for an economic recovery, where should we look first ?

The American consumer is still indebted and has to further reduce its debt burden.

So it is rather unlikely that in the near future the consumer will spend money as he did before the crisis and that consumer stocks will see the economic recovery first.

So what about manufacturing, what about industry?

Industrial companies in general have cash and a low debt burden.

Interests are at an historic low and stocks do not look expensive.

So it is not a suprise that M&A activity is picking up. Insiders see that they can buy companies for cheap and that it is a good moment to ramp up capacity.

Further down the road this eventually will lead to more hiring, reducing unemployment and finally will help the consumer to spend more money.

This blog follows the liquid handling systems specialist Colfax Corporation (NYSE: CFX)

So why not add some shares of this company to your portfolio now?

Colfax strategy is to grow not only internally but also by small acqusitions.

The stock currently trades at $ 13.73 which means a p/e of 18 (Dec 2010), a forward p/e (Dec 2011) of 14 and a p/fcf of about 18.

This does not seem too expansive for this very fine company!

The first time this company has been mentioned on this blog was on May 16th, 2009, when it traded at $ 7.27:

until today a performance of 89 % easily beating the general stock market!

And believe me, we did not reach the end of the road yet!

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