Focus List - Price 40.42 on April 29
by McAdams Wright Ragen

GGG's fundamentals continue to hold up well, even as it navigates the difficult U.S. housing market, which is weighing on the contractor-division results. 1Q revenues increased 3.4% [versus year-ago] to $204.1 million and EPS totaled 57 cents, versus 50 cents. Gains are mostly due to steady progress in European and Asian markets. GGG continues to accumulate debt to buy back stock. Maintaining our current earnings estimate of $2.55 a share and 52 [target]...equat[ing] to GGG stock trading at 14.2 times operating cash flow in 2009 or 18.5 times earnings. Market cap: $2.4 billion.

Rating on Graco (GGG) was cut to Sell, Goldman Sachs said. $32 price target. Stock has a lot of exposure to a US slowdown and lacks near-term catalysts.

Focus List - Price 33.63 on Jan. 29
by McAdams Wright Ragen

[Fluid-handling company] GGG reported 4Q and full-year 2007 results. Quarter sales totaled $205.2 million; earnings, 56 cents...improvements versus a year ago; FY earnings reached $2.32; revenues, $841.3 million. Revenues in the Americas remain under pressure from difficult housing market...Still, GGG has...produce[d] positive fundamental comparisons on the back of international sales strength, industrial customers, share repurchases, and foreign-currency benefits. We're trimming our '08 earnings estimate from $2.77 to $2.55...Target still 52, implying [that] Graco can trade at a slight premium to the broad market on earnings of about $2.80 sometime in the 2009 time frame. Market-cap: $2.2 billion.

BUY

Downgraded by CIBC from Sector Outperform to Sector Perform

A steady grower

12%

like the sector / niche

Downgraded by Friedman Billings from Outperform from Mkt Perform

Hidden Values Alert
GGG has a 44% return on equity, and it has consistently been above 40% for the past several years. The company has a small amount of debt ($25 million line of credit) which is probably paid off by now. The net profit margins are over 18% and the numbers of outstanding shares has dropped from 82 million shares in 1990 to 66 million in 2006. This is a solid company with increasing demand for its products.

GGG is a good company, and a price of $36 or less per share represents a very good value. If GGG can grow earnings at only 14% per annum (a margin of safety that is 26% lower than its past-five-year EPS growth rate of 19% per annum) and maintain a P/E of 16, the stock will reward investors handsomely over the next five years.

Droped $80 in 1 month