The use of automation and artificial intelligence (AI) in the industrial sector has gained a lot of traction this past year, and it is only likely to increase from there. Artificial intelligence has the potential to revolutionize the industrial inspection industry, offering new solutions for improving efficiency, accuracy, and safety.
Moreover, government initiatives like the Bipartisan Infrastructure Law, where the Biden administration has announced over $185 billion in funding for over 6,900 specific projects across all 50 states, are likely to keep the industry afloat.
Despite interest rate hikes and recessionary fears, the industrial sector is anticipated to remain buoyed. Driven by factors like the increase in government spending on infrastructure development, the global construction equipment market is projected to grow at a CAGR of 6.6% to reach around $222.14 billion by the end of 2028.
Moreover, the industry enjoys favorable investor sentiment, as evident from Industrial Select Sector SPDR Fund’s (XLI) 12.7% returns over the past six months, compared to S&P 500’s near-zero returns over this period.
With these factors in mind, fundamentally strong industrial stocks BHP Group Limited (BHP), Southern Copper Corporation (SCCO), and Carrier Global Corporation (CARR) might be smart buys for the year. Moreover, these companies pay stable dividends, which is a relief in current uncertainties.
BHP Group Limited (BHP)
Headquartered in Melbourne, Australia, BHP operates as a global resources company. Its segments include Copper, Iron Ore, and Coal. The business is involved in mining iron ore, metallurgical coal, gold, uranium, and other minerals. The corporation also engages in smelting and potash development activities.
On December 12, BHP entered into a comprehensive collaboration agreement with I-Pulse Inc. (I-Pulse) and I-ROX SAS (I-ROX) to identify and develop uses of pulsed-power technology across several facets of the mining sector. The collaboration will help BHP to expand its portfolio and aid in decarbonizing its current business.
BHP pays a $7.00 per share dividend annually that yields 11.40% on the current price, which is higher than its four-year average dividend yield of 7.83%. Moreover, its dividends have grown at a 37.6% CAGR over the past three years.
BHP’s revenue increased 14.4 % year-over-year to $65.10 billion in the fiscal year ended June 30, 2022. Its profit from operations grew 33.7% year-over-year to $34.11 billion, while its underlying EBITDA rose 15.9% year-over-year to $40.63 billion.
Also, the company’s underlying attributable profit and underlying basic earnings per ordinary share came in at $23.82 billion and $4.71, increasing 39.5% and 39.4% year-over-year, respectively.
Analysts expect the company’s EPS for the current fiscal year ending June 2023 to increase 6.6% from the prior year to $5.01. Its revenue is likely to amount to $53.79 billion in the current year.
The stock has gained 17.9% over the past three months and 14.8% over the past year to close the last trading session at $62.77.
BHP’s POWR Ratings reflect its strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Value and Quality. Among the 36 stocks in the B-rated Industrial – Metals industry, it is ranked #2.
To see additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for BHP, click here.
Southern Copper Corporation (SCCO)
SCCO is an integrated producer of copper and valuable by-products and operates the mining, smelting, and refining facilities in Peru, Mexico, and Chile. It operates through Peruvian operations, Mexican open-pit copper operations, and Mexican underground mining operations segment (IMMSA).
On October 20, SCCO announced a quarterly dividend of $0.50 per share of common stock that was payable on November 23, 2022.
It pays $2.00 annually, which translates to a yield of 3.16% on the current market price. It has a four-year average dividend of 4.87%. Moreover, its dividend payout has increased at a CAGR of 29.8% over the past three years and 42.8% over the past five years.
During the third quarter that ended September 30, 2022, SCCO’s net sales amounted to $2.16 billion. Its net income increased 20.1% from the prior quarter to $519 million, while its adjusted EBITDA came in at $1.02 billion.
The company’s EPS is expected to rise 25.3% year-over-year to $0.70 in the fiscal second quarter ending June 2023. Its revenue is expected to grow 5.8% year-over-year to $2.44 billion in the same quarter.
SCCO has gained 29.3% over the past three months, closing the last trading day at $63.22.
It is no surprise that the company has an overall rating of B, which equates to Buy in our proprietary rating system.
SCCO has an A grade for Quality and a B for Stability and Sentiment. In the Industrial – Metals industry, it is ranked #11.
Beyond what we’ve stated above, we have also given SCCO grades for Growth, Value, and Momentum. Get all SCCO ratings here.
Carrier Global Corporation (CARR)
CARR provides heating, ventilating, air conditioning (HVAC), refrigeration, fire, security, and building automation technologies worldwide. It operates through the HVAC, Refrigeration, and Fire & Security segments.
On December 19, BHP announced that it had signed a strategic collaboration agreement with Amazon Web Services, Inc. (AWS) to offer additional industry-leading Software-as-a-Service (SaaS) solutions in AWS Marketplace. These solutions will include SaaS offerings in the areas of HVAC performance, sustainability, and safety and security.
The collaboration is part of CARR’s growing investment in digitally enabled lifecycle solutions designed to inspire confidence in the health and safety of indoor environments.
On December 7, CARR declared a quarterly dividend of $0.185 per outstanding share of common stock, representing a 23% increase over the prior quarterly dividend. The dividend will be payable on February 10, 2023. The company has raised its dividend consecutively for the past two years.
Its annual dividend of $0.74 yields 1.76% on the prevailing price, higher than its four-year average dividend yield of 0.84%.
CARR’s total net sales increased 2.1% year-over-year to $5.45 billion for the third quarter ended September 30, 2022. Its operating profit rose 84.3% year-over-year to $1.53 billion. Moreover, its net income attributable to common shareowners grew 179.7% from its prior-year quarter to $1.31 billion.
Street expects CARR’s EPS and revenue for the first quarter ending March 2023 to increase 4.1% and 10.5% year-over-year to $0.56 and $5.14 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
Shares of CARR have increased 16.8% over the past six months and 8.9% over the past three months to close the last trading session at $42.03.
CARR’s strong prospects are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
CARR has a B grade for Value and Quality. CARR is ranked #7 out of 46 stocks in the B-rated Industrial – Building Materials industry.
Click here to access CARR’s Growth, Momentum, Sentiment, and Stability grades.
BHP shares rose $0.46 (+0.73%) in premarket trading Thursday. Year-to-date, BHP has gained 1.97%, versus a -0.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Industrial Stocks That Are Smart Buys for 2023 StockNews.com
