Five Little Industrials With an Edge: Hurco Companies, Inc. (HURC)

Houston Wire and Cable Company (NASDAQ:HWCC) is kind of a cheat for this list, because they don’t make anything, but they are distributors of wire and cable.   This can range from mechanical cable for lifting objects to highly specialized, coated, armor plated, fire-retardant energy cables that make the innards of a power plant or factory hum.  They are a distributor with some clear value added for large projects to outsource to them the wire and cable part of the job.  Just in time delivery of just the right amount of inventory can be a great value. I’m hoping those services are a path to increasing market share and growth as we put the recession in the rear view mirror.

IPG Photonics Corporation (NASDAQ:IPGP) is awesome, and not just because the founder sounds like a James Bond villain in his heavy Russian accent, or that there are cool YouTube videos of their lasers.  IPGP spells out clearly why their product is better, faster, and ultimately cheaper as well.  Their industrial lasers are in high demand for existing and ever widening applications, from the auto assembly line and shipbuilding to military and oil drilling.  The risks here are valuation and growth expectations (this is the stock routinely with the highest P/E on the list) and increasing competition.

Last, but not least, is Sun Hydraulics Corporation (NASDAQ:SNHY) , which makes the hydraulic valves and systems in mobile applications like construction equipment and fixed applications like industrial robots.   It goes without saying that if they are on this list, I believe they have a competitive advantage.  Their valves are superior in quality and have a reduced footprint, and I’ll leave you to research the rest.   Read the past few years of annual letters to shareholders; they are compelling reading in the small niche of hydraulic-valve-lit (disclosure: I knew nothing about hydraulics before investing in this company). With reinvested quarterly and special dividends, it has quietly grown to my largest investment and thumped the market (which entailed holding through some serious volatility).  Watch out hares, this tortoise has got your number.

The article Five Little Industrials With an Edge originally appeared on Fool.com and is written by Anthony Reilley.

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