LFUS, OSIS, FELE: Three Industrial Stocks Good For Your Radar

LFUS, OSIS, FELE: Three Industrial Stocks Good For Your Radar
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Industrial stocks are not exactly fashionable or in-trend stocks, largely because these companies make run of the mill products that get the job done but don’t excite anyone. When some companies do produce interesting stuff, it is often too complex for common investors to understand the technology.

Whatever may be the reason, the bottom line is that these stocks are not usually on investment radars of common investors. However, Littelfuse, Inc. (NASDAQ:LFUS), OSI Systems, Inc. (NASDAQ: OSIS), and Franklin Electric Co. (NASDAQ:FELE) are companies which not only make great products but also make excellent investment choices.

LFUS, OSIS, FELE: Three Industrial Stocks Good For Your Radar

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Illinois based electronic parts manufacturer Littelfuse, Inc. (NASDAQ:LFUS) has a market capitalization of $1.57 billion and currently trades at a price earnings multiple of 19. These are good numbers but there are many companies with such impressive numbers. What makes Littelfuse different from others is that it makes circuit protection products and supplies to the electronics, automotive and electrical industries.In addition, the company also produces specialty electronic items such as sensors.

Recently, it acquired a sensor subsidiary of Key Safety Systems for $145 million – an acquisition which went almost unnoticed. The transaction is aimed at bolstering Littelfuse’s automotive portfolio and comes after a similar buy out of Accel AB in May last year. While these deals give an insight into just how aggressively it is pursuing its expansion strategy, Littelfuse, Inc. (NASDAQ:LFUS) already has a robust balance sheet and income statement. With no long term debt on its books and a promise of enhanced earnings in the future, this is surely a solid play with limited downside.

Diversified Play in OSI Systems

On the other hand, OSI Systems, Inc. (NASDAQ: OSIS) is a vertically integrated manufacturer of specialized electronic systems and components for a well-diversified set of end users in homeland security, healthcare, defense and aerospace markets. The stock currently trades at a price earnings ratio of 23 after witnessing a correction of 24 percent over the last quarter. Following the drop in price due to somewhat disappointing results in previous quarters, the stock seems to be back on the upward trajectory after third quarter results.

In the latest quarter, the company saw a drop of 5 percent in revenues to $198 million but profits grew 7 percent to $13.5 million. Financial performance was somewhat limited by one time charges such as goodwill impairment without which, the profit stood at $15.2 million. All in all, the stock may be a value pick at a forward price earnings multiple of 14.9, with very low debt and a bright fourth quarter outlook.

Franklin Electric Co. (NASDAQ:FELE) is involved in the business of producing water and fuel pumping systems including submersible motors, pumps, electronic controls and related parts and equipment. Unlike Littelfuse, Inc. (NASDAQ:LFUS) and OSI Systems, Inc. (NASDAQ: OSIS), Franklin Electric’s line of business is crowded with a large number of players.

However, the company has done well to protect and grow its margins which is reflected in full-year 2012 results underlined by a 60 basis points improvement in gross margin to 33.8 percent. It has a low debt equity ratio of 0.32 and its current valuation stands at a multiple of 16 times to its forward earnings. The stock has come off its 52 week high in March and looks ripe for another rally after the healthy correction. An important trigger for the stock would be the company’s earnings announcement next week which may again take it to new high levels. The stock has generally received positive ratings from brokerage houses.

Overall, the recent pullback in industrial stocks may be a good time to accumulate these attractively priced stocks.

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