Have You Heard of Danaher?

Washington, D.C.-based Danaher Corp. (DHR - commentary - Cramer's Take) is one of those very large (about $9 billion in annual revenues) companies that doesn't make many things to give it a high public profile, but is a star performer nonetheless.

Not only is its name not that well known, but even its branded products are largely under the radar screens of most investors because it sells primarily in the business-to-business market. But don't let its low profile make you think this company isn't a high performer. In fact, on Jan. 23, its stock hit a 52-week high.

Before I tell you why you should have Danaher in your portfolio, let me tell you what it does. It is basically an industrial manufacturer that operates in three segments. One of these is its instrumentation segment, which produces devices used in electronic, medical and other fields. Its industrial segment produces precision motors and controls. And its tool and component segment makes tools under the brand name of Matco, for professionals, and house brands for others, including Sears' Craftsman line of tools. In all, the company has more than 40 industrial brands.

How does a company get so many brands? This is a company that has a track record of successfully growing its business through both internal growth and acquisitions. In fact, as recently as January 2007, it closed on the acquisition of Vision Systems Limited, an Australian maker of automated instruments. In May 2006, it acquired Sybron, a maker of products for the dental profession. And in January 2006, it acquired Visual Networks, which was in the networking business.

You get the idea; this company is an acquirer. It has a reputation with its acquisitions for cutting costs, selling poorly performing assets and generally improving the acquisitions' performance. When a company has many acquisitions, a major management challenge is getting everyone to read from the same page. To deal with all this diversity, the company has a well-regarded management system it calls the Danaher Business System, which includes management philosophy and processes that involve a fair share of continuous improvement.

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At the time of publication, Reese had no position in the stocks mentioned, although holdings can change at any time.

John P. Reese is founder and CEO of Validea.com, an investment research firm, and Validea Capital Management, an asset management firm serving affluent investors and companies. He is also co-author of the best-selling book, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback. Click here to send him an email.

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