The industrial sector is rebounding rapidly from pandemic-era low with the fast-paced reopening of the economy. Total industrial production rose 16.3% year-over-year in May. Furthermore, on June 24, President Biden announced a $579 billion infrastructure package deal with the bipartisan group of lawmakers, which should drive demand for industrial products.
The industrial sector’s growth is expected to continue in tandem with the economy’s recovery.
Given this backdrop, we think shares of fundamentally sound industrial companies Caterpillar Inc. (CAT), Lockheed Martin Corporation (LMT), Corning Incorporated (GLW), and Generac Holdings Inc. (GNRC) could generate significant returns in the coming months.
Caterpillar Inc. (CAT)
CAT manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The Peoria, Ill.-based company’s segments are construction industries, resource industries, energy and transportation, financial products and all other.
On June 22, CAT signed a collaboration agreement with Nouveau Monde to develop, test and produce Cat® “zero-emission machines”. Amid the rising importance of sustainability and zero-emission initiatives worldwide, this development should allow the company to generate significant revenues in the near term.
CAT’s sales and revenues increased 11.8% year-over-year to $11.89 billion in its fiscal first quarter, ended March 31. Its operating profit stood at $1.81 billion, up 29.2% from the same period last year. Its profit per common share grew 39.9% from its $2.77 year-ago value. And its cash and cash equivalents balance rose 59.2% from the prior year quarter to $11.35 billion over this period.
A $12 billion consensus revenue estimate for its fiscal third quarter (ending September 2021) indicates a 21.4% increase year-over-year. The Street expects the company’s EPS to rise 66.4% from the prior year quarter to $2.23 in the current quarter. CAT has an impressive earnings surprise history also; it beat consensus EPS estimates in each of trailing four quarters. CAT has gained 71.7% over the past year, and 18.2% year-to-date.
CAT has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
CAT also has a B grade for Growth and Sentiment. It is ranked #30 of 84 stocks in the A-rated Industrial - Machinery industry. Click here to view additional CAT ratings for Momentum, Value, Quality, and Stability.
Lockheed Martin Corporation (LMT)
LMT is a Bethesda, Md.-based security and aerospace company that researches, designs, develops, manufactures, and integrates technology systems, products, and services worldwide. The company operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
On June 30, Switzerland selected LMT’s F-35 Lightning II for future air defense requirements. Earlier in June , LMT announced that it will provide NASA with two spacecraft for its Venus discovery mission. This demonstrates the company’s dominance in the market.
On May 26, LMT collaborated with General Motors Co. (GM) to develop the next generation of lunar vehicles. This collaboration should allow the two market leaders to enhance their capacities to develop a unique class of vehicles.
LMT’s net sales increased 3.9% year-over-year to $16.26 billion in the fiscal first quarter, ended March 28. Its operating profit grew 2.8% from its year-ago value to $2.18 billion. LMT’s net income came in at $1.84 billion, indicating a 7% rise year-over-year. The company’s EPS increased 7.9% year-over-year to $6.56.
The Street expects LMT’s revenues to rise 4.2% year-over-year to $17.19 billion in the current quarter, ending September 2021. A $6.69 consensus EPS estimate for the current quarter indicates a 7% improvement year-over-year. LMT also beat the consensus EPS estimates in each of the trailing four quarters.
Shares of LMT have gained 5.5% over the past six months to close yesterday’s trading session at $378.35. The stock has gained 5.2% year-to-date.
It’s no surprise that LMT has an overall B rating, which equates to Buy in our POWR Ratings system. LMT also has a B grade for Value, Stability, and Quality. Among the 62 stocks in the Air/Defense Services industry, LMT is ranked #7. To see more of LMT’s component grades, click here.
Corning Incorporated (GLW)
GLW is one of the world's leading innovators in materials science engaged in manufacturing specialty glass and ceramics. The company's segments include display technologies, optical communications, environmental technologies, specialty materials, life sciences and all other. GLW is in Corning, N.Y.
On June 3, GLW introduced Corning SMF-28® Contour optical fiber, which offers 50% faster installation and a wider spectrum. This innovation, with its upgraded efficiency, should be widely demanded by telecommunication operators.
On May 12, GLW inaugurated its new venture, the Gen 10.5 LCD Glass Plant in China, which should strengthen its global presence.
GLW’s net sales increased 37.6% year-over-year to $3.29 billion in the fiscal first quarter, ended March 31. Its operating income grew 514.9% from its year-ago value to $502 million, while its net income improved 724% year-over-year to $599 million. The company’s EPS increased 518.8% year-over-year to $0.67.
Analysts expect GLW’s revenues to increase 17.4% year-over-year to $3.53 billion in its fiscal third quarter, ending September 30, 2021. A $0.57 consensus EPS estimate for the current quarter represents a 32.6% rise from the same period last year. GLW also surpassed the Street’s EPS estimates in each of the trailing four quarters. Shares of GLW have gained 59.1% over the past year, and 13.5% year-to-date.
It is no surprise that GLW has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The stock also has a B grade for Growth, Stability, Momentum, and Quality. Among the 44 stocks in the Industrial-Manufacturing industry, GLW is ranked #13. To see additional GLW ratings for Value and Sentiment, click here.
Generac Holdings Inc. (GNRC)
GNRC is a manufacturer and seller of power generation equipment, energy storage systems, and other power products for the residential and light commercial and industrial markets. The Waukesha, Wisconsin company’s segments include domestic and international.
On June 1, GNRC announced the acquisition of Deep-Sea Electronics Limited, an advanced controls designer and manufacturer. The acquisition should allow GNRC to bolster its engineering and control capabilities and thereby accelerate innovation in its product offerings.
GNRC reported record net sales of $807.43 million--up 69.7% year-over-year--in its fiscal first quarter, ended March 31. Its income from operations grew 200.9% from its year-ago value to $189.12 million, while its net income attributable to GNRC improved 235.1% year-over-year to $148.99 million over the period. The company’s EPS increased 242.6% year-over-year to $2.33.
A $936.47 million consensus revenue estimate for the current quarter, ending September 30, 2021, indicates a 33.5% improvement from the same period last year. Analysts expect the company’s EPS to come in at $2.55 in the current quarter, representing a 22.6% rise year-over-year. Furthermore, GNRC surpassed the Street’s EPS estimates in each of the trailing four quarters.
GNRC has gained 80.5% year-to-date. The stock gained 245.2% over the year to close yesterday’s trading session at $415.15.
GNRC has an overall B rating, which equates to Buy in our proprietary rating system. It also has an A grade for Momentum, Sentiment, and Quality, and B for Growth. It is ranked #33 in the Industrial - Machinery industry.
Beyond what we’ve stated above, we have also rated GNRC for Value and Stability. Click here to view all GNRC ratings.
CAT shares were trading at $216.71 per share on Thursday afternoon, down $0.92 (-0.42%). Year-to-date, CAT has gained 20.23%, versus a 15.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.4 Top Industrial Stocks to Buy in July appeared first on StockNews.com