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Company name AMETEK, Inc.
Stock ticker AME
Live stock price [stckqut]AME[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Fair
EPS growth Fair
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $49.31
Target stock price (averages with growth) $47.45
Target stock price (averages with no growth) $26.45
Target stock price (manual assumptions) $49.81

The following company description is from Google Finance: http://www.google.com/finance?q=ame

AMETEK, Inc. (AMETEK) is a manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The Company markets its products across the world through two groups: the Electronic Instruments Group (EIG) and the Electromechanical Group (EMG). EIG provides monitoring, testing, calibration and display devices for the process, aerospace, power and industrial markets. EMG produces engineered electrical connectors for electronic applications; precision motion control solutions; specialty metals and alloys; and electric motors, blowers and heat exchangers. The Company’s end markets include aerospace and defense, medical devices, factory automation, mass transit, petrochemical and other industrial markets.

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in AMETEK, Inc. as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns. I am removing AMETEK from my Watch List.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of AMETEK, Inc. calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
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In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

  • Stock price at the time of the calculation: $51.31
  • Growth: 0.09
  • Current EPS (TTM): $2.37
  • P/E: 22
  • Future EPS Calc: $3.64
  • Future Stock Price Calc: $80.22
  • Target stock price: $49.81

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I hope that this makes you a Confident Investor.

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stock market photo

You should be investing for a reason or a goal. For most people, the reason is your retirement. If that is the case, this article may not help you. Your retirement is a long term event where you will have to continue to draw cash for 10, 20 or even 30 years.

This article is for those that are investing for an immediate goal such as

  • Buying a house
  • Buying a car
  • Paying for a vacation
  • College expenses

When you are saving for an event, your thinking about risk needs to transition from long-term to short-term. You need to start asking yourself if the benefits of the short-term gain start to become outweighed by short-term risk.

The market is not friendly, but it is rewarding. At any given time, we are probably only a few weeks from a series of events that will cause the market to correct by 10%. These events are not always foreseeable, and they may not even be rational. However, geopolitical events tied with earning reports of some specific companies could spook major investors and cause a correction. This is life as an investor. If you follow my advice in my book, The Confident Investor, you will eliminate much of your losses for these downturns but you won’t eliminate all of those losses.

When the market suffers a loss, and you have followed my book’s advice, you will suffer a small loss but will be in a position to grow your portfolio dramatically. My book teaches you to take advantage of these opportunities. However, those opportunities require a bit of patience and a bit of time. If you are saving for a specific expense like a new home, you may not have that time. If you are saving for retirement, you do have that time since your retirement will hopefully last for decades. Your house purchase though probably only has a realistic window of a couple months and maybe a couple weeks. Several months is not enough time to increase your profit after a market correction.

When the current short-term outlook potential is higher for a loss than an increase, you need to preserve your capital. You cannot tolerate a loss as much as you can tolerate not earning another 1-2% on your investments. If the market drops 10%, then you won’t have time to make that up before you need the cash. If the market continues to increase, it will only increase 1-2% in the short term.

If you are six months away from making a major purchase such as a house or a car, your likely gain on that capital is probably 6-10% for the half year. If a market correction happens, your loss is likely to be 5-10% depending on your diligence of following the indicators. That gain is approximately equal to the loss. However, the loss may cause you to not afford the purchase. In this case, you need to lock in your cash so that you can afford the expenditure. If your purchase timeframe is longer, it may make sense to continue to ride the market.

As you get closer to your expenditure date, pull your investments into cash. You are no longer in “long term” mode, and you are now in “short term” mode. The pain of a small correction may be very large for you. Don’t be afraid to protect your gains to achieve your goals.