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Graham Corp. up 16 Percent on Positive Earnings

Graham Corp. (AMEX: GHM) rose more than 16 percent in Friday trading on ten times normal volume after reporting better than expected earnings.

Graham Corp. manufactures and designs heat transfer and vacuum equipment to customers in the energy sector including petroleum refining and electric power generation.

The company reported adjusted EPS of $0.41–a year over year increase of 412 percent. This beat analyst consensus of $0.31. Revenue came in at $30.9 million–an increase of 53 percent from one year prior and above expectations of $29.9 million.

President and CEO James Lines said, “We executed well in 2013 and delivered solid results while operating in what to date has been a modest market recovery. During a rather moderate market, our team effectively influenced what was within their control to drive top line growth and earnings.”

Graham Corp. Analysis

With Friday’s move, the stock is up 52 percent over the past year. It formed a basing pattern in April and has traded in a tight range until Friday. As with any stock that has an outsized move higher, watch for the stock to retreat and fill the gap. Because the stock only trades 20,000 on average, investors should see this as a highly speculative name with little media coverage.

Before committing money to Graham Corp., careful study of the balance sheet is recommended.

Disclosure: At the time of this writing, Tim Parker had no position in the company mentioned.

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