Woodward Governor Company (WGOV)

Industry (192 industry groups) – Buy strong stocks on pullbacks in strong industries

WGOV is part of the Machinery Industrial industry group. This industry group has been in the top 10 rankings for 4 of the past 52 weeks ranking it the 36th best industry group as far as top 10 rankings. Not outstanding, but there are groups that go years without hitting the top 10 just once. The industry group dropped out of the top 10 industry rankings for the week ending July 20, 2007. Currently the industry is ranked 22nd.

WGOV is the 11th largest market cap in this industry group. The top 3 are PH (parker hannifn, IR (ingersall-rand), and FWLT (foster wheeler)…. I would buy FWLT on a good pullback that isn’t related to industry weakness.

Fools – Top 100 fools outperform the rest of the pack

10 of 10 top 100 fools green thumb this stock with no red thumbs. That is a pretty strong number of bullish fools. However, only one top 100 fool has green thumbed in the last 90 days. I would expect this pick to heat up if the industry group heats up and to languish if we don’t break into the top 10 industry groups.

Technical – In a bear market buy the best companies most oversold, in a bull market buy strong stocks on pullbacks

FTK is about 19% off its 52 week high, however, the earnings beat after hours today will close that gap 4%. In a bear market I prefer a bigger discount, however, I am recommending a stock a day every day and we are getting close to what could be the end of a bear rally. So it is what it is. This is the top value I have found today.

The stock has unbelievable support at $25, however, I highly doubt we see this number again in 2008 with the guidance provided today by the company. I expect the more recent floor of $27 to be the true support line if the market tanks again. As with most bear market charts, the 50 day is below the 200 day which is bearish

Sales / Earnings Growth – If it isn’t growing then neither is your portfolio

Sales Growth 23% / Earnings Growth 22%

Sales growth has ranged between 20% and 25% going back to April 2007. Prior to that date sales growth every 6 months or so slowly kept creeping up from (1%) sales growth in July 2006. Earnings growth has been over 17% (the range has mainly been in the low 20s) since July 2004. So it has shown consistent earnings growth without any major drops in estimates. We like consistency

Fundamentals

Pass Line (place a bet on this stock if you like this)
The company has consistently beat earnings estimates and has offered guidance for 2008 above Wall Street estimates
In the last 90 days 2 analysts have initiated or upgraded to a buy
Strategic focus is on energy control and optimization solutions – aircraft, industrial, transportation, power generation and process industries.
There is some revenue derived from the wind power space (roughly 10%)
3 of the 4 BRIC markets are going to be increasing the spend for the type of products WGOV produces (the exception being Brazil)

Don’t Pass Line (don’t place a bet on this stock if you don’t like this)
I usually have some negative factor that I throw out there with my daily pick, but after reading the recent 8K, the last 10K and the conference call (seeking alpha)…. I didn’t find anything that really jumped out at me as a concern. This would be one of my potential picks if the market were to pull back as I expect it to within the next month