IDEX is a leading engineer of fluidics and optics systems, fire and rescue equipment, as well as other specialty products. The company operates in the niche applied-solutions market, developing industrial-use pumping and dispensing equipment, lubrication systems, banding and clamping devices, as well as rescue tools. IDEX serves various customers worldwide.
Fundamentally, the company has remained highly acquisitive- strengthening and expanding its businesses through strategic asset additions. Growth has been underpinned by the group's solid product portfolio, successful execution abilities, and investments into increasing geographic exposure, particularly to emerging markets, as well as productivity enhancement and digitisation. The company displayed robust growth during 1Q23, with earnings and revenue increasing ~7% and ~12% respectively, as demand (particularly in the industrial and chemical end-markets) stood firm. This represented a strong start to the new year, with the company already well-poised to build on an impressive FY22.
Technically, the stock is trading above its key support level (see the black trendline on the first chart), which acts as a barrier to prevent any downwards movement of the price. This support level, underpinned by strong demand, is indicative of a potential price reversal to the upside, thus making the stock an attractive investment opportunity.
The stock is currently trading below its 200-day simple moving average (SMA) of ~$218. We take a counter-trend strategy in anticipation of a price correction in the near term.
Our bullish view is supported by the emergence of upside momentum as per the MACD indicator. The Coppock Curve (which recently formed a trough), as well as the On-Balance Volume indicator (which is trending sidewards) further substantiate our stance.
Share Information
| Share code | IEX US |
|---|---|
| Industry | Industrial Equipment |
| Market Capital (USD) | 16.07 billion |
| One year total return | 18.60% |
| Return year-to-date | -6.07% |
| Current price (USD) | 212.62 |
| 52 Week high (USD) | 246.23 |
| 52 Week low (USD) | 177.26 |
| Financial year end | December |
| Closing paragraph | The share price has come under some pressure recently, though various technical indicators point toward an imminent correction. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 8.12 | 8.68 | 9.09 | 9.31 |
| Growth (%) | 6.87 | 4.78 | 2.37 | |
| Dividend Per Share (USD) | 2.40 | 2.54 | 2.71 | 2.80 |
| Growth (%) | 5.94 | 6.62 | 3.33 | |
| Forward PE (times) | 24.50 | 23.38 | 22.84 | |
| Forward Dividend Yield (%) | 1.16 | 1.23 | 1.32 | |
| Closing paragraph | Earnings growth is expected to remain strong over FY23, which given the group's strong free cash flow generation should allow sufficient room for IDEX to carry out its objective of returning value to shareholders. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
LIT - Take Profit (Close the Position) |
BLK - Buy (Continue to hold) |
AIG - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 62.48 | 684.91 | 54.72 |
| Current | 68.84 | 739.80 | 58.89 |
| Movement | 10.2% | 8.0% | 7.6% |
| Summary text | We closed the trade early to lock in profit and reduce portfolio risk. |
We remain interested in the rising wedge pattern as displayed by the stock price. Trading continues above the 200-day simple moving average and upward momentum is supportive.
Our profit target is $765 with a trailing stop-loss at $705. Exit the position around 23 August 2023. |
The stock is trading in a falling wedge pattern within a previous uptrend. The stock is slightly above its 200-day simple moving average. Upward momentum supports the bullish bias.
Our profit target is $71 with a trailing stop-loss at $63.50. Exit the position on 30 August 2023. |
| Share Name and position |
HACK - BUY (Continue to hold) |
FCX - Buy (Continue to hold) |
FOXF - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 47.58 | 39.71 | 105.69 |
| Current | 51.01 | 42.08 | 111.00 |
| Movement | 7.2% | 6.0% | 5% |
| Summary text |
The price remains above critical support levels and trade continues above the 200-day simple moving average. Momentum has shifted back to the upside.
Our profit target is $55 with a trailing stop-loss of $49. Exit the position around 4 August 2023. |
Price action reflecting some symmetry is of interest. The stock is trading above its 200-day simple moving average. Emerging upside momentum provides further support.
Our profit target is $47 with a trailing stop-loss at $38.90. Exit the position around 18 October 2023. |
Price action depicting higher highs and higher lows remains attractive. The stock is testing is 200-day simple moving average. Emerging upside momentum provides further support.
Our profit target is $126 with a trailing stop-loss of $103. Exit the position around 6 October 2023. |
