WW Grainger: Old Fashion is in Style

WW Grainger - GWW is the quintessential industrial company. They produce few products that most investors have ever heard of, yet they provide nearly 180,000 products that other companies use to produce end-user products. GWW's products include electric motors, compressors, HVAC components, lighting, signs, and hand tools.

While most of their business is in North America(they do have a small operation in China), their primary customers are major multinational US and Canadian companies that export products to companies and consumers throughout the world. Thus, in our way of thinking, GWW is a beneficiary of the weak dollar and the growth of US exports.

They have increased their dividend for 36 years consecutively. Over the last five years, GWW earnings and dividends have grown by almost 16% per annum. They recently reported earnings that were about 5% better than expectations, which has propelled the stock higher, even in the face of the backing and filling of the major indices.

Monday GWW reported that April sales were up nearly 13% over the same period a year ago. Investors liked the news and pushed the stock higher.

One of the things I really like about GWW is that they report sales growth on a monthly basis. What a wonderful old fashion idea: to keep their investors apprised of how they are doing, they report much more frequently than most companies.

Grainger is a regular on the lists of "Most Admired Companies."

This is a "crown jewel" company selling at bargain basement prices. Our Dividend Valuation Model above shows that GWW is 15%-20% undervalued. You and I know that such a gain in the coming year is not a sure thing, but at least you'll be hearing about how they are doing monthly. That is a comfort in a world where the question I find myself asking frequently about many financials is: Who are you? For you are certainly not the company I have known for these many years, or for that matter, last summer, or even last quarter.

WW Grainger has spent nearly 80 years building a reputation for straight talk and solid results. Perhaps one of the best things it has going for it is that the "money gunners" on Wall Street probably don't know much about it because it is an old fashioned industrial company. That my friends is a solid reason to look into it.

We own the stock are buying more.

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