About: Nordson is a world leader in precision dispensing and fluid management technologies. Its highly engineered products are used in the dispensing of industrial adhesives, sealants, coatings and polymers. It also manufactures equipment used in the testing and inspection of electronic components. Nordson’s products are used in the making of consumer packaged goods, packaging, consumer electronics and medical devices.

Why it’s in the portfolio: Semiconductor and consumer electronics markets account for around 20% of Nordson’s revenue and have been an important source of growth in recent years. As devices such as mobile phones become more sophisticated, with more electronic components inside and features such as waterproofing, 5G and foldable screens, Nordson’s precision adhesive-dispensing technology becomes increasingly valuable. Looking forward, an emerging application for Nordson’s adhesive-dispensing technologies that management are excited about is in electric vehicle batteries.

Fundamentals: NDSN has a market cap of $9b USD, a PE of 28x forward earnings, EPS of 6x forward earnings and a PEG ratio of around 2.0. The company currently has a 0.9% dividend yield and a 19.2% payout ratio. The company’s debt to assets are currently 38.8% and debt to equity is 91.5%.

What could go wrong?