Gencor: Growth Stock, Capitulation Opportunity

Gencor Industries (GENC) is at the forefront of two major bull
markets, namely infrastructure and agriculture. The Orlando-based heavy
machinery maker manufactures asphalt plants, soil remediation plants,
combustion systems and screening equipment for the road and highway
construction industry. They are working on developing different biomass
fuels, waste fuel recovery, asphalt recycling etc. The pending global
infrastructure upgrade cycle and agricultural secular growth trend
should allow this company to benefit from a myriad of fronts.<!---->
Management has had an excellent track record of creating shareholder
value, namely by eliminating most debt, by maintaining a steady growth
in R&D spending and by continuing to grow its core
businesses.

Nevertheless, small companies do
often incur unforeseen capital expenditures, delays in orders and
temporary R&D expenses in an effort to better position themselves
for the long-term. While GENC has consistently met and exceeded Wall
Street expectations, it just reported a dismal quarter. Nevertheless,
the company still managed to earn $1.50 for the trailing 6 months. Even
after the miss, it is quite conceivable for the company to earn $3 in
2008 and for it to resume its growth trend after
that.