The Timken Company (TKR) is one of the world’s oldest and largest makers of bearings and bearing products with nearly $4 billion in annual sales, observes Genia Turanova, editor of Unlimited Income — and a participant in The Interactive MoneyShow Virtual Expo on Oct. 5-7. Register here for free.

Over time, the product line has evolved from relatively simple tapered ball bearings to a wide variety of critical mechanical parts, including protected bearing assemblies, or “housed units,” for operations in extreme environments.

If you need to move, rotate, or pull something, Timken-branded bearings are most likely your first choice. The company is known for its focus on design and quality and for the durability of its products, which are used in machinery of all kinds. 

The company makes a wide variety of branded bearings — highly specialized, premium-priced, mission-critical serviceable machinery components. Its high precision and quality engineering prevent railroad crashes, allow mining machinery to work underground and even help the Mars Rover to land safely.

These mechanisms often need to work in unforgiving environments and operations must be able to rely on the equipment. Sending a rover to Mars or installing a giant windmill is very expensive.  Operators want their equipment to function for as long as possible.  

The company also makes mechanical power transmission parts (chains, belts, clutches) — to the tune of 34% of total sales. Like the bearings (66% of sales), these products add value for the customer even at a higher price point — thanks to their high-end quality and top-notch reliability. 

Like most industrial companies, Timken had a tough time in 2020. But it posted a strong recovery in 2021: The company saw a 32.3% jump in revenue in Q2 2021 vs. Q2 2020… and strong growth in all geographical segments. 

With strong orders and growing demand, Timken is an excellent choice to play the recovery. Analysts are expecting Timken’s earnings per share (EPS) to grow from $5.37 this year to $6.14 in 2022 to $7 in 2023.

By itself, this earnings growth is a great reason to own shares of Timken. But it also scores high on a “value” metric— its forward price-to-earnings (P/E) is about 12, which is low for any market. 

At the same time, TKR yields 1.7% — having raised its dividend twice over the past year.  And because the Timken family still owns a big chunk of the business, dividend cuts aren’t in the cards. After all, the company has paid dividends uninterrupted for 99 years. It’s not about to break its winning streak. 

Subscribe to Unlimited Income here…