Question: What would be a good ball bearing play?

[zyzzyva57]

Since ball bearings are in almost everything, what is a good stock or the top dog in this area? For example, John Deere must be a major user

[Svenwulf]

are we going for a manufacturer, or maybe the suppliers of the material used in production? for manufacturers, it would have to be specialty bearings for the higher margin possibility. probably buried in a conglomerate somewhere. i would imagine that de machines all there own bearings, unless very specialized.

maybe bw?

[zyzzyva57]

I guess your comments are part of the core of the question I am trying to form

Here is the fuzzy stage I am at: whatever sector is hot at the moment is full of ball bearings, e.g., John Deer, ethanol, corn farming and so on...In May, if Cramer is right and the FED chief cuts, then home building...In the hurricane season, a few Katrinas, energy through the roof--The common denominator is what? Ball bearings

The reason I like Cisco and Level3 is for the same reason in a sense: regardless the hot sector, the sector has to gobble up ever more bandwidth; ergo, with ball bearings

I do have a beginning list of something:
http://finance.google.com/finance?q=ROLL
* In the lower left corner there is a list of competitors I can check out
* And many companies are private or are buried within other companies

I went to the Deere site for a clue, but found nothing, except I could see where the company gobbles up darn Ball Bearings

I am learning about Ball Bearings:
http://www.google.com/search?hl=en&q=ball+bearings&btnG=Google+Search

And you are right: both the good and bad thing with bearings is they come with so many sizes and uses and to the right of the Google search are a list of sellers

I guess this weekend I need to search out some type of Ball Bearing Journal to find out who does what

How do you like my idea?

[aiki14]

I would look at Germany for ball bearing companies. Every world war 2 movie has an air raid on the ball bearing factories in Heidelberg or Mannheim. Maybe they rebuilt after the war. :wink:

[MoMoney4Me]

Here's a site that will get you started. Enough about the bearing industry to keep you busy all weekend.
http://www.ebearing.com/index.htm


Includes a directory of worldwide bearing companies. http://www.ebearing.com/directory/index.htm

[zyzzyva57]

Actually, Japan may be best

I may visit a local ball bearing company today (Hoover--owned by a Japan company) and scope out what journals are in the waiting room and then pick up some intel from a manager or two--I am shameless in getting intel

I know companies like Toyota and Kubota have higher standards for bearings than say GM or Ford, dah-h

Still, I am fishing here for ideas on how to form questions to research

[wehttamsivad]

try rbc bearings inc. (roll) already up today

[zyzzyva57]

"roll" is up!

Thanks MoMoney4Me for your tip--looks like a good step up in my homework

I feel like that dude in the old movie "The Graduate" that couldn't get his mind off plastics

In my update of the movie he fixates on bearings and bushings, oh lord! :)

[bigzip]

For what its worth, we buy a lot of bearings from Timken (TKR, crazy looking chart IMO) where I work (Tier I powertrain supplier). We also use SKF, FAG (not a typo, its an acronym for something in German I think) and Koyo. I must admit I was surprised to see a thread about bearings, but that's one more reason why I like this site.

[zyzzyva57]

This is an A+ site I scan daily...We may argue, but we don't flame, which I hate, e.g., Yahoo Message boards

Is there a "J.C. Penny" bearing/bushing retailer? It seems maybe this would be the route to go, based on the (CD) theme that interests me, because this industry is seemingly to diverse for a Boeing type Best of Breed in bearings and bushings--i.e., for the Widget maker, who is the one source used?

Instead of chasing hot sectors, to me, a theory to investigate are Common Denominators (CD), for example:

Goldman Sachs has its financial fingers in all sectors

Hot or cold sectors need ever more routers, therefore, Cisco

Looking at page 115 of Cramer's book "Real Money" and page 206 of his latest book at the way he uses a sine wave to show "sector rotation," what is the CD? Bearings and bushings! Look at your computer and think about the bearings used...Outside, the cars...The Cats at the highway construction site or new subdivision or the John Deere farming equipment or energy production (never mind if this week it is Zinc or gold or whatever)...What is the one thing most miss if they could go inside of Google or Yahoo? Freaking bearings--really!

[aiki14]

From Barrons for Monday 19 feb

Timken Remake Still in Act I
By JIM MCTAGUE

WHEN INVESTORS GRABBED SHARES OF BEARING MAKER Timken early last week, they nudged toward the $30 mark -- surprising, since a week earlier, the company had reported disappointing earnings. Otherwise, the shares have been rangebound for months.

Some bulls see the shares (ticker: TKR) breaking above 30 this year, citing Timken's plans to play down its low-margin, high-volume auto business and ramp up specialized aerospace-product sales.

It's a compelling story, and likely to have a happy ending. Yet like Wagner's excruciatingly long Ring Cycle, this opera will hit many highs and lows before the final act. Meanwhile, the bulls appear to have placed their bets too early: The 2007 outlook suggests a price lower than 28.

Timken, which boasts that it "keeps the world turning," is the world's largest manufacturer of tapered roller bearings -- devices used to reduce friction between parts in engines and other machines. It operates in 27 countries and has annual sales of about $5 billion and a stock-market value around $2.8 billion. The Canton, Ohio, firm also owns two steel mills that make seamless tubing.


Timken is trying to diversify its sales beyond the car business to the energy, rail and aerospace industries.
Timken products are found in nearly every U.S.-made vehicle. This once was an unalloyed source of pride and profits. However, when the Motor City hits the brakes -- as it's doing now -- Timken gets a nasty whiplash. And the problem will only worsen if the Detroit three don't regain market share. Hence, Timken is reinventing itself as a specialty producer for aerospace, energy and rail equipment.

On Feb. 7, Timken reported fourth-quarter earnings of $35.3 million, or 37 cents a share, 63% below the year-earlier figure. For all of 2006, Timken netted $222.5 million, or $2.36, on $4.97 billion in sales. In 2005, it made $260.3 million, or $2.81 a share, on $4.82 billion.

For '07, the company expects earnings from continuing operations to rebound to $2.50-$2.70; analysts originally had been projecting $2.77. Disappointing demand from Detroit cost Timken nine cents a share in the fourth quarter, and an increase in auto-warranty reserves for some defective bearings from one of its plants cost another eight cents.

Analyst Mark Parr of KeyBanc Capital Markets has a 52-week target of 35. "The company's sensitivity to autos in conjunction with all of its manufacturing-restructuring activities over the past couple of years clearly has hurt earnings momentum," says Parr. "But given the recent run-up in auto-supplier stocks, Timken looks very timely right now."

He adds that Timken's EPS guidance for 2007 isn't that far out of line with the consensus prediction. "Our own 2007 forecast was $2.70," he says. His 35 target is six times enterprise value to Ebitda -- or earnings before interest, taxes, depreciation and amortization, a measure of cash flow -- within a normalized range of five to eight times. Enterprise value is stock-market value, plus debt, minus cash.


(Timken, it should be noted, is a large KeyBanc client. The firm advised Timken on the sale of Latrobe Steel last year, a deal that roiled the stock because many shareholders believed the mill was worth much more than the $215 million Timken received. Timken also has a $375 million loan and $500 million line of credit with Keybanc.)

Robert Schenosky, a managing partner at Jefferies & Co., is guarded in his assessment of Timken. While he applauds management's restructuring efforts, he says the auto business remains a cause for concern. In his view, the bullish case for Timken rests on the assumption that the overall economy will markedly improve. "We don't share that enthusiasm," he says. He views the consensus estimates for Timken for both '07 and '08 as unrealistically high. "It's difficult for a stock's price to fight through when the majority of estimates proved to be too aggressive," says Schenosky. He rates Timken a Hold, warning that "We would not put a Buy on it at 28 and some change." Timken's 52-week low is 27.46.

Wachovia senior analyst Wendy Caplan estimates 2007 EPS at $2.40 and '08 at $2.50, since she foresees weaker steel profits and a slower-than-expected auto recovery. She assumes 11 times earnings, which translates into a stock price in the high 20s.

The Bottom Line

Bulls on Timken think its stock, now around 29, is headed for the mid-30s. Eventually, that's likely, but it could head lower first until signs emerge that its restructuring is bearing fruit.Keeley Asset Management of Chicago owned 1.78 million Timken shares, as of Sept. 30. Robert Becker, a senior vice president, is disappointed that Timken's stock has been flat to down since then. He'd like Timken to become more like Kaydon (KDN), a company with "screaming margins" on specialty products like bearings for windmills and medical equipment: "Kaydon sells in twos and threes and Timken sells in the thousands." But Kaydon makes a lot more on each item. Kaydon CEO Brian Campbell tells Barron's that his bearings are so specialized, he's not worried about foreign competition.

Although Becker expects Timken to get there, he says it will be a two-steps-forward, one-step-backward struggle. "We hope there's a pickup. We think it is reasonably valued and that its balance sheet has improved, and that management is capable of improving its operations," he comments. "If we didn't think it would do well, we would not be in the stock; we are patient," Becker says.

Investors should probably be patient, too: It could be at least a year before the Fat Lady sings.

[zyzzyva57]

This play still looks good after buying into "roll" back in Feb

Ball bearings just seem to be hot to be into regardless what sector is hot

Energy and basic metal mining, for example, has to use ever more

Just look around at all the things that contains bearings and as a sector grows, guess what, more bearings are needed

It also looks as if bearings would be a good stock for a bad hurricane season

http://finance.google.com/finance?q=roll

http://stockcharts.com/charts/candleglance.php?roll,kdn,nnbr,emr,gnrl,tkr|D|H14, 5

[Lou]

Timken is the best company, I went to college near their headquarters, I believe they went thru a restructure and are just now starting to get moving in the right direction. If you talk to anyone in Ohio they will talk about
Timken, world class bearings, bla bla bla..

[zyzzyva57]

Interesting--You sure make a strong case!

In comparison, "roll" has a StockScout rating of "5"
http://moneycentral.msn.com/investor/StockRating/srsmain.asp?Symbol=roll

"tkr," a "7"
http://moneycentral.msn.com/investor/StockRating/srsmain.asp?Symbol=tkr

"roll" PEG: 1.40
"tkr": 1.21

"roll" chart:
http://stockcharts.com/h-sc/ui?s=roll&p=W&b=5&g=0&id=p35325511020

"tkr" chart:
http://stockcharts.com/h-sc/ui?s=TKR&p=W&b=5&g=0&id=p35325511020

Which company has its fingers in the most pies? (I want a real Common Denominator bearing/bushing company that can feed off whatever sector is hot, because bearings will be needed)

What American traded company is considered Best of Breed?

[kingfisher]

I work on military aircraft. All the bearings we install are Timken for what its worth.

[zyzzyva57]

Ever actually hear who uses "roll" bearings?

From personal experience, do you like Timken?

Ever thought of investing in Timken?

Since you work with bearings,do you feel my thesis that a bearing play as a common denomitor stock, because bearings are used in any sector?

[Lou]

Ever actually hear who uses "roll" bearings?

From personal experience, do you like Timken?

Ever thought of investing in Timken?

Since you work with bearings,do you feel my thesis that a bearing play as a common denomitor stock, because bearings are used in any sector?

I can honestly tell you I looked at the stock about a month ago. But, I decided to go with Mittal Steel. If you go to Steelnews.com you find some info about their plants.

[kingfisher]

Actually there are many types of bearings. On the Chopers I work on half are of a kind made by special order. All have to meet Mil Spec which is another process in its own. These are for the flight controls. But we use all Timken where thier type of bearing is called for. I would guess around 40% of the bearings on the aircraft are Timken. After the war is over our consumption will go down. Bearings have grease in them. These aircraft are in a desert enviorment with lots of sand. The sand sticks to the grease and make a liquid sand paper on all bearings and surfaces. We replace every bearing during rebuild. This occurs every rotation from the desert, at a minium once a year. Under more favorable conditions the bearings last as long as 4 years.

As far as a stock play: Bearings will be used as long as there is OIL to run machines. Demand will go up and down with the industries that use them IMO.

[zyzzyva57]

Thee is a local Hoover plant that builds bearings to various specs, but the company is owned by a Japan company

It would seem bearings are important, because when you stop and reflect, bearings are in everything, most bearings not to any super precise specs

The oil industry, ethanol, and the fast rising nuke energy will gobble up bearings

[loslobos71]

Zyzzyva, you talked about a retailer for bearings and I think that FASTENAL (FAST) may be a good choice. They sell everything nuts and bolts item imaginable...go on their website www.fastenal.com
They were up big this week and Morningstar loves them (high moat) and so does S&P. Seems like a well run company even though its not a pure play on ball bearings ( they do sell them though).

[zyzzyva57]

I think I am more interested in the manufacturing end

Wonder if there is an etf play in this from maker to seller?

I sure will add "fast" to my Watch List as I try to get a handle on this

On this, I really appreciate anecdotal skinny of people actually involved in this sector from maker to seller

Wonder who is most popular in the energy field, e.g., oil, ethanol, and the sector that will come on ever stronger--nuclear?

There has to be undiscovered little companies that supply something special to the nuclear industry