In a time when the “Magnificent Seven” stocks dominate the headlines, it might be hard to get pumped up about a small industrial sector company like Graham (NYSE:GHM). Yet, I encourage you to conduct your due diligence and maybe add some “machinery magic” to your portfolio. Currently, I’m bullish on GHM stock and hope to see it maintain its momentum this year.
According to Graham’s corporate profile, it specializes in “fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries.” Think about machines, pumps, and industrial vacuums, and you’ll get an idea of what Graham delivers. Now, let’s see why this relatively unknown small-cap company is garnering some attention today.
Graham Makes Headway with Profit and Margin Expansion
You might not think that there’s a lot of exciting news in the field of heavy-machinery parts. However, Graham’s latest round of fantastic financials are certainly eye-catching.
Here’s the rundown. In the third quarter of Fiscal Year 2024, Graham’s net sales improved 10% year-over-year to $43.8 million. That’s a pretty good start, but it gets much better from here.
Graham posted blockbuster quarterly earnings, as the company’s Q3-FY2024 adjusted net income surged 183% year-over-year to $2.4 million. Could this small-cap stock become a mid-cap or even a large-cap someday?
There are no guarantees, but anything’s possible on Wall Street. The future definitely looks bright for Graham, as the company’s Q3-FY2024 gross margin increased by 660 basis points year-over-year to 22.2%, and Graham’s adjusted EBITDA margin improved by 320 basis points to 8.8%. That’s not too shabby, wouldn’t you agree?
Conclusion: Should You Consider GHM Stock?
Graham stock is up 11% today so far and is finally capturing some well-deserved attention. Plus, the stock has been on an impressive run since last summer.
Can this bullish momentum continue throughout the year? Only time will tell, but I am considering a long position in GHM stock because Graham’s profit and margin improvement are bright green flags for this under-the-radar machinery-parts purveyor.
