GWW

[earthtodan]

This week I started a 1/2 position in W.W. Grainger. GWW is a 42 year dividend grower with a high DGR and low payout ratio. The P/E is not low, but the EPS growth is consistently high. One thing I like about it is the 5 year historical EPS growth of 13% is the same as the 5 year projected EPS growth rate of 13%, according to Finviz. No turnaround story here, just a dip in price and business as usual.

Grainger is a top-tier wholesale distributor of building and industrial supplies. Their major competitor is Fastenal (and increasingly Amazon). According to Morningstar, they perform an essential function by aggregating demand for more than 3,500 manufacturers, and providing a higher level of service to end markets than could be achieved by going factory direct. The space is highly fragmented and there is plenty of runway to grow faster than GDP.

If the price takes another dive and the P/E becomes truly attractive, I might take a full position.

[Dividend Watcher]

I agree, Dan. Consistent grower and a great business. I don't know how many businesses I've been into and seen a Grainger catalog sitting on the shelf.

I caught some shares at half price during a flash crash in 2009 or 10 (can't remember). It kept running up and up and the dividends kept increasing. I finally unloaded it when the P/E got too high and the yield got too low. I should have kept a partial position since it is such a consistent grower. It is one of my mistakes.

I don't think Amazon is that much of a threat for the foreseeable future. They just don't have the depth nor expertise in industrial products that GWW has. Sure, you can find anything single item cheaper but any company that is managed well won't tolerate hundreds of vendors (read: Amazon affiliates), the lack of terms and managing the purchasing headaches. The internal controls expenses add up fast.

With your time frame, I'd hang on for the long-term. I think it will be one of those companies that rewards you very well in the future.

[earthtodan]

You're right, GWW's operation is too large for Amazon to replicate, as is their expertise. I've always worked for companies that are customers of industrial suppliers, and they (we) are not switching from the in-stock one stop shop suppliers to the fragmented third party direct-to-consumer model.

The real threat is Fastenal. They offer low prices and innovative distribution methods. However their stock looks far less attractive.

[EricL]

GWW is on my wish list but hasn't given me an opportunity yet due to its high valuation. Great company that is looking more attractive now after the pull back, but unless if falls to the low $200 level I'll probably keep watching.