I'll Take What's Behind Dover No. 1

I happened to be researching industrial giant Dover Corp. (NYSE:DOV) when I discovered three other companies trading on the Nasdaq and the NYSE with "Dover" in the names. With the markets so difficult these days, I thought one or more of these Dovers could be the ticket to the promised land. Then again, maybe not. (To learn strategies for investing during volatile markets, read Investing During Uncertainty).

The tale of four Dovers:

Dover No. 1
The biggest of the four stocks, Dover Corp., is an industrial giant with $7.2 billion in sales from its four divisions: industrial products, engineered systems, fluid management and electronic technologies. The mid-cap stock with a diversified group of businesses nets 46% of its sales outside the U.S. If you're like me, you may have mistaken Dover Corp. for Dover Elevator, a once-owned subsidiary that was sold to Thyssen Industries in 1998.

No matter, there's plenty to keep Dover Corp. growing. Most impressive is the fluid management division, where operating earnings increased 26% year-over-year in the third quarter ended September 30, 2008. Overall, it had operating margins of 15.9% in Q3, which is 30 basis points higher than its objective for the period. With its stock down 40% in the last 52-week period, a dividend of $1.00 (yielding 3.3%) and a 10-year compound annual growth rate of 11% for revenues, I'm interested.

Dover No. 2
If you're part of the horsey set, you likely will have heard of micro-cap Dover Saddlery (Nasdaq:DOVR). It markets equestrian products in the U.S. through a multi-channel distribution model. With a 33-year history of serving English and Western show jumping and polo riders, Dover Saddlery is the place to go for equipment and other riding-related products.

With 11 company-owned stores, the internet and print catalogs, the company expects to deliver full-year sales in 2008 of between $81 million and $87 million with most of the gains coming from its retail sector. In the second quarter ended June 30, 2008, its same-store sales were up 3.6% year-over-year.

The company's revenue guidance for the year was issued before the current economic meltdown, however, so I'd expect the full-year sales number to drop below $81 million. Over a long-term period, this could be interesting play. But it may not be wise to touch this stock if you think you will need the money before three to five years.

Dover No. 3
The global economic recession is a double-edged sword for Delaware-based Dover Motorsports (NYSE:DVD). It owns four premier motorsport facilities: Dover International Speedway, Gateway International Raceway, Memphis Motorsports Park and Nashville Super Speedway. These racetracks are home to some of racing's most exciting events.

Clearly, racing in general, whether NASCAR or Formula One, will be hurt by this economy. It doesn't matter that the drop in oil prices will make it cheaper for teams to race. The simple fact is that advertisers and patrons alike are tightening their purse strings, making it extremely difficult for racetrack operators to sell tickets and, therefore, to make money. (To learn how to protect your portfolio when the economy is weakening, read Recession-Proof Your Portfolio).

Dover Motorsports stock is down 45% in the last year. With revenues for the first six months off slightly, I don't see it making more than the $3.7 million in net income that it brought in last year. I'd stay in the pits on this one.

Dover No. 4
Dover Downs Gaming & Entertainment (NYSE:DDE) is a casino, hotel and harness racing track located in Dover, Delaware. Facilities include a 165,000 square foot casino, a 500-room luxury hotel and a horse racing track that has conducted harness races for 38 years. Profitable every year for the last 10, analysts estimate earnings per share will be 72 cents in 2008, which is 3 cents less than in 2007.

Short-term, this stock may be fine, as gamblers tend to bet closer to home in tough economic times. Long-term, however, some feel that Maryland's legalization of gambling - set to begin in November 2008 - could be a threat to Delaware gambling and harm future revenues. This could prove true, but with a track record of profits and a price-to-earnings ratio below seven, this stock is hard to pass up.

Bottom Line
Of the four Dovers, I like Dover Corp. and Dover Downs Gaming & Entertainment. For short-term investment, I'd go with the gambling stock and for long-term investment I'd go with the industrial stock. Seeing that I'm always a long-term investor, I'll take what's behind Dover No. 1.