Graco Inc. (GGG): A Bull Case Theory

We came across a bullish thesis on Graco Inc. on FluentInQuality’s Substack. In this article, we will summarize the bulls’ thesis on GGG. Graco Inc.'s share was trading at $85.95 as of September 8th. GGG’s trailing and forward P/E were 30.48 and 26.95 respectively according to Yahoo Finance.

Graco Inc. (GGG) is a leading manufacturer of fluid handling equipment, specializing in solutions for challenging materials with high viscosities, abrasiveness, and corrosive properties. The company serves a range of cyclical end-markets, but approximately 40% of its revenue comes from parts and accessories, which generate more stable and predictable demand. Graco’s premium products offer substantial returns on investment for customers by reducing labor, material, and energy costs while improving quality and environmental outcomes.

Because these products represent a small fraction of the end-user’s total costs, Graco enjoys significant pricing power, enabling best-in-class margins, with gross margins exceeding 50% and EBIT margins approaching 30%. Despite these strong fundamentals, the stock has underperformed recently due to broader economic weakness, creating an attractive valuation for potential investors. The company’s disciplined management team and durable position within its niche market further reinforce its long-term prospects.

Graco’s combination of premium offerings, resilient parts and accessories revenue, and high-margin operations positions it as a solid industrial leader, with a business model that is both defensible and capable of delivering consistent cash flow. With the stock now trading at a reasonable price following recent underperformance, investors have an appealing entry point to gain exposure to a company with strong pricing power, robust margins, and stable demand, making it a compelling opportunity for long-term investors seeking durable industrial growth.

Previously we covered a bullish thesis on Graco Inc. (GGG) by Stock Analysis Compilation in December 2024, which highlighted its leadership in fluid handling equipment, resilient parts and accessories revenue, premium products, and best-in-class margins. The stock has appreciated approximately 1.5% since our coverage as the thesis played out. The thesis still stands, and FluentInQuality shares a similar perspective but emphasizes Graco’s consistent cash flow and defensible business model.

Graco Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held GGG at the end of the first quarter which was 26 in the previous quarter. While we acknowledge the potential of GGG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.