By: Scott Davis
Since our Oct launch, RXN has stood out to us as one of the few deep value cyclicals left in an otherwise pricey space, and as such remains one of only 4 high-conviction Buy-Accumulate names out of our 28 stocks. We see plenty of cyclical upside from recovering industrial markets, with several years of heavy restructuring translating to outsized incrementals. Recent M&A deals, notably the pending Centa Power Transmission acquisition, also look smart and well-timed. And as a factory floor supplier (bearings, gear boxes, etc.), RXN plays into our bullish capex thesis, which should get a boost from accelerated depreciation under the new tax bill.