Jefferies Assumes Coverage Of Diversified Industrials (ATU, AIMC, RBC)

Jefferies favors Altra Holdings AIMC due to its improving end-markets and cost reduction programs, ATU since Jefferies believes it is positioned for multi-year earnings growth, Regal Beloit RBC since it believes sales and earnings will accelerate after 4Q, and HSC due to its opportunities to tap new markets. The valuations of these sub-sectors vary during an economic cycle. Jefferies believes it is in the early stages of a new cycle. Capex in key end-markets is increasing and earnings in 2010-12 are expected to increase in all sub-sectors. But the dawning of a new cycle has negative implications for multiples: Process Industrials (ATU, AIMC, RBC): These stocks' multiples, save for the recession period, had little variability last decade. Capex was favorable and earnings were strong. Multiples have since contracted. ATU closed Monday at $22.48 AIMC closed Monday at $15.95 RBC closed Monday at $57.25