Wafting Higher On Wind Turbines

Wind power is hot as alternative energy, and it is attracting investors to Kaydon (KDN ), a maker of precision components, including anti-friction bearings for wind turbines. Kaydon's products are engineered for robotics, aerospace, and other industrial uses, but "the big driver of growth will be the exploding demand for its bearings for wind power equipment," says Wallace Jones of GreenTech Research, which owns shares. Its stock has climbed from 39 in December to 51.96 on June 27. Jones figures it will hit 65 in a year. Wind turbine makers can't keep up with demand, which bodes well for Kaydon, says Jones. He sees sales of wind gear jumping from $35 million in 2008 to $100 million by 2010. Jones forecasts profits of $2.35 a share in 2007 on sales of $445 million and $2.65 in 2008 on $500 million. He says private equity groups may propose a management-led buyout with its strong cash flow and $300 million on the balance sheet. Holden Lewis of BB&T Capital Markets (BBT ), also a bull, says CEO James O'Leary "aims to bring new eyes to the M&A objective."

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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