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Top Picks 2016: Lydall
01/27/2016 7:00 am EST
My Top Pick for growth-oriented investors in 2016 is a global manufacturer that produces specialty engineered products for the thermal/acoustical and filtration/separation arenas, explains John Reese, editor of Validea.
Lydall, Inc. (LDL)—a small-cap ($600 million) headquartered in Manchester, Connecticut—has taken in more than $500 million in sales over the past year and gets high marks from several of my Guru Strategies.
Lydall has been growing earnings at an exceptional 59% pace over the long-term, using an average of the 3- and 4-year earnings per share growth rates.
It's a favorite of my James O'Shaughnessy-based model, which likes that the firm has grown EPS in each year of the past half-decade.
This approach also likes Lydall's combination of momentum and value: It has a solid 12-month relative strength of 74 and a price/sales ratio of 1.2.
My Martin Zweig-inspired model, meanwhile, likes that Lydall's growth has been accelerating-it was 175% last quarter-and that the firm's debt/equity ratio (16.7%) is well below its industry average (167.3%).
Lydall shares trade for only about 13 times earnings and the company has a return on equity of 20%, two more reasons it gets high marks from my models.
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