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Filtration firm a clear winner with investing gurus

Rafal Gerszak/The Globe and Mail

Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

Connecticut-based Lydall Inc. designs and manufactures specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers, medical filtration media and devices and biopharmaceutical processing components for thermal/acoustical, filtration/separation and bio/medical applications. It has a market cap of $500-million (U.S.).

Lydall has grown sales at an 11-per-cent pace over long term (using avg of 3, 4, and 5 yr sales growth rates), nearly double its industry average (6 per cent).

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It gets strong interest from the James O'Shaughnessy-based strategy, in part because it has upped EPS in each year of the past half-decade. The O'Shaughnessy model also likes its combination of a red hot 90 relative strength and reasonable 1.0 price/sales ratio.

Lydall has a 3.1 current ratio, a sign of good liquidity, according to the Benjamin Graham-based approach. It has $156-million in net current assets versus $61-million long term debt, which the Graham-based approach likes.

The company has averaged a 39-per-cent return on retained earnings over past decade, earning high marks from the Warren Buffett model.

It has debt/equity ratio of just 29 per cent, far below the industry average of 78 per cent, which the Martin Zweig-based model loves.

Lydall gets some interest from the Motley Fool-based model, which likes that it grew earnings at a 37-per-cent rate and sales at a 47-per-cent clip last quarter (versus year ago quarter). The Fool model also like its 90 relative strength.

Click here for a complete breakdown of Validea's investing guru report.

Read other research reports here.

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