Graham Corp (GHM)

Hey everyone thanks for reading my blog. I hope everyone is having a good weekend. Its been awhile since I last posted on here and I apologize for that. Work has been busy and I have been studying for the Certified Equities Professional test, (CEP) for the last few weeks as well. However I thought I should get back to it and start posting more.

Today I am going to be talking about Graham Corp, a company I found while looking over the top gainers for Friday. Graham reported there 2nd quarter fiscal earnings on Friday. Earning per share came in at $1.10 compared to just $0.14 a share last year! They also declared a 5 for 4 stock split effective on November 30th. They also increased there quarterly dividend to $0.05 from $0.03.

What do they do?
Graham Corporation (Graham) manufactures and sells custom-built vacuum and heat transfer equipment to customers worldwide. The Company’s products include steam jet ejector vacuum systems, surface condensers for steam turbines, vacuum pumps and compressors, various types of heat exchangers, including helical coil heat exchangers marketed under the Heliflow name, and plate and frame exchangers. Graham’s products produce a vacuum, condense steam or transfer heat, or perform a combination of these tasks. Its products are available in a variety of metals and non-metallic corrosion resistant materials. The Company’s has two wholly owned subsidiaries, Graham Europe Limited in the United Kingdom and Graham Vacuum and Heat Transfer Technology (Suzhou) Co., Ltd. in Suzhou, China.

Fundamental Quality?
I like to rate stocks on 3 different components, the first being fundamental strength. First thing that strikes my eye is there trailing twelve month return on investment of 22.1 up from 16.4 this time last year. Another good sign is there gross margin for the trailing twelve months is up to 42.9, from 27.2 in the last quarter. That is a huge improvement!

Current Operational Trends
The second category I like to rate a stock on is what I like to call Current Operational Trends. Or more simply, how strong is a company's most recent sales and EPS growth.
One way to gauge this is by using the sales growth for the most recent quarter. For Graham its 41% increase for the latest quarter. I also like to look at the EPS growth for the most recent quarter. For Graham its a 45% increase, that is very nice to say the least.

Technical Strength
The final aspect of a stock I like to look at is, Technical Strength.

Taking a look at the chart we can see the huge gap up on earnings day to set a new 52 week high. Both the 50 and 200 day moving averages are up and very high volume on Friday. Both the RSI and MACD are both trending upwards and I see no weakness in the charts, even after such a huge day on Friday this stock should continue higher.

Based on the fundamental and technical strength of this stock I am rating it a buy.

This Stock (GHM) Is Rated A Buy

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