Graco (GGG) reaffirmed its through-cycle long-term growth algorithm at its investor day, with its new segment structure and "One Graco" operating model supporting future revenue growth and reinforcing its position as an under-the-radar compounder, RBC Capital Markets said in a Wednesday note.

The company reiterated its targets of 5% to 7% organic growth and expects 3% to 4% contribution from M&A. This implies a 9% to 10% total revenue compound annual growth rate. Graco is targeting a 12% earnings compound annual growth rate.

The company continues to pursue growth through core product expansion, margin improvement and acquisitions, according to the note.

Additionally, Graco is accelerating its M&A strategy and targeting one-third of future growth from acquisitions. The company's pipeline includes more than 100 vetted targets. These targets are screened under strict financial and strategic criteria. Graco also has a net cash balance sheet, which supports its acquisition capacity.

RBC has an outperform rating on the stock with a $95 price target.

Shares of Graco were up 1.8% in Wednesday trading.

Price: 80.09, Change: +1.41, Percent Change: +1.79