Donaldson’s Amazing (But Dull) Run

As long-time readers know, I love finding dull stocks that have done extremely well over the years. If you take a step back, it’s kind of amazing that Wall Street focuses so heavily on high-glamour businesses while there are lots of great companies that get almost no attention.

Just think: How many stocks do you recognize from the Top 10 performers of the last 20 years?

One such outstanding dull stock is Donaldson ($DCI) who’s in the exciting business of…filtration systems! Check out the graph below. The stock was on my Buy List up through 2009 when I stupidly kicked it off. Over the last 27 years, Donaldson is up 9,700% to the S&P 500’s 695%. That doesn’t include the dividend which has been increased every year since 1996.

Over the last three years, Donaldson’s earnings-per-share have grown from $1.67 to $2.19 to $2.87. Note the nice steady upward trend. That’s what we like to see.

Their fiscal year ends in July so we already have two quarters under our belt. Donaldson’s public EPS forecast for this year is $3.25 to $3.45. Using my trusty abacus, I think they should be able to earn $3.40 per share this year and $3.72 per share next year. Give or take. Donaldson’s CEO recently said that their earnings for this fiscal year would constitute the 21st record year in the last 23 years.

As much as I like Donaldson, the shares seem very pricey here. Of course, that’s what I thought in late 2009 when I decided to take it off the Buy List.

One final note: Donaldson’s stock will split 2-for-1 next week.

Posted by on March 20th, 2012 at 11:19 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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