SDVKY - Sandvik Dogged By Short-Cycle Concerns As Mining Recovers Strongly

• Sandvik had a mixed second quarter; revenue, operating income, and orders rebounded sharply from 2020 levels, but were more mixed relative to sell-side expectations.
• The SMS business seems to be decelerating, but auto, aerospace, and energy customers haven't recovered to pre-pandemic levels yet, and management continues to diversify the business.
• Mining is hot now, with mining companies launching greenfield projects and refreshing their over-aged fleets; Sandvik is particularly well-leveraged to copper and gold.
• Sandvik isn't a completely clean story, but I believe the valuation reflects that, and I think the risk-reward trade-off is favorable at these levels.

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