Even with the market run up since the election, we are still finding opportunities for investment. Tennant Company (NYSE:TNC) is a Minneapolis-based firm we have been following for several years and just recently added to our buy list. The company is a leader in commercial scrubbers and sweepers for office, warehouse and retail store environments where labor is the largest component of cost. In a seemingly low-tech industry, Tennant has been investing more heavily in research and development than its competition. The company’s newest machines incorporate on-board technology that provides user manuals in multiple languages, predictive maintenance alerts and telemetry to track machine locations and improve productivity. Longer-term, Tennant has partnered with a robotics company to develop autonomous floor sweepers and scrubbers that could operate without a human driver during off hours when a facility is closed. We predict that over the long-term, Tennant will successfully commercialize this technology, giving it a significant competitive advantage, premium pricing and above average margins.
From Mairs and Power (Trades, Portfolio)'s first-quarter 2017 Growth Fund commentary.
