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Full Version: Timken Steel - don't look at current performance
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Timken Steel is a cyclical company. Its performance last year benefited from the spike in steel prices.

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But steel prices will come down due to its cyclical nature. When this happens, I expect Timken performance to follow suit.

The way to value cyclical companies is not to look at the current performance, but rather its performance over the cycle. On such a basis, there is no margin of safety.

I am a long term investor looking for opportunities in cyclical companies as they can enable you to make repeated gains due to the cyclical nature. If you wan to know more about how I analyse and value such companies, read my article How to overcome issues when valuing cyclical companies