- Robust demand and production growth for on-highway and off-highway commercial vehicles are driving strong first-fit momentum for Donaldson, but component and labor shortages could start limiting upside.
- Trucking aftermarket demand could likewise be capped by driver shortages, though industrial demand is recovering nicely and aerospace has just bottomed.
- New product/market opportunities in food/beverage, chemicals/electronics, and life sciences/pharma remain attractive (and likely require M&A), but opportunities in markets like hydrogen fuel cells could be under-appreciated.
- Mid-single-digit revenue and high single-digit FCF growth support a modestly better-than-average mid-to-high single-digit prospective return, but Donaldson has an edge with quality, scarcity, and growth upside.
For further details see:
Donaldson Leveraging Strong Demand And Easier Comps