Should You Buy It? Take the Over on Dover

It's also worth noting that Peter Francis of the board of directors has begun buying Dover shares on the open market. According to Securities and Exchange Commission filings, Francis has spent about $200,000 recently to purchase 4,400 shares. Additionally, the company announced a 10 million-share stock-buyback program (5% of the company's shares) in August.

Now, management will have to cut back on its $350 million annual acquisition strategy to execute the buyback, but I believe that's a prudent shift given the current share price. The next update on this front will likely come at Dover's annual investor meeting Friday.

In addition to the support of insider purchases and the company's repurchase program, the stock also sports an attractive 1.8% dividend yield. Management can cover the 20-cent quarterly dividend four times over with expected 2007 earnings of $3.19 a share. Dover's free cash flow is consistently above reported net income, and the company also has an A-rated balance sheet, with a debt-to-capitalization ratio of less than 25%.

Between Dover's earnings momentum and discount valuation, I believe the stock will find a bottom in the near term. Supported by the company's share-repurchase program and the recent insider buying, I believe the shares are more likely to see the mid-$50s over the coming quarters than $40.