The industrial sector is on track for solid growth with rising global demand after overcoming labor and supply chain constraints caused by the pandemic.
Industrial production and capacity utilization surpassed last year’s levels as new and pending orders from various sectors provided a much-needed boost to the industry. Despite multiple headwinds, such as raw material inflation and labor shortages, industrial production rose 3.7% year-over-year in August.
The industrial sector’s growth is expected to be boosted by rising government and corporate investments, sustainable practices, and the latest digital technologies. Moreover, the Biden administration’s $1 trillion Bipartisan Infrastructure Law will drive domestic manufacturing, as the materials used for construction will have to be produced within the country.
Given this backdrop, investing in fundamentally sound industrial stocks Hillenbrand, Inc. (HI), Myers Industries, Inc. (MYE), and Vishay Precision Group, Inc. (VPG) could be wise. These stocks are trading under $50 and are well-positioned to capitalize on the sector’s growth.
Hillenbrand, Inc. (HI)
HI is a diversified industrial company that operates in the United States and internationally under three segments: Advanced Process Solutions (APS), Molding Technology Solutions, and Batesville.
On October 6, 2022, HI announced the acquisition of LINXIS Group. HI’s president and CEO, Kim Ryan, said, “The completion of the LINXIS Group acquisition marks a clear step forward in the execution of our strategy to grow as a world-class industrial company and deliver long-term value to our shareholders.”
On August 31, 2022, HI announced the completion of the acquisition of Herbold Meckesheim GmbH (Herbold). “By leveraging Herbold’s key technologies, we have an opportunity to strengthen our leadership position in the recycling industry and expand our offerings across the entire recycling value chain,” Ryan said.
HI’s net revenue increased 3.7% year-over-year to $721 million for the third quarter ended June 30, 2022. Its gross profit grew 2.4% from the year-ago value to $231.30 million, while the adjusted net income attributable to Hillenbrand rose 2.8% year-over-year to $66.40 million. The company’s adjusted EPS increased 8.2% from its year-ago value to $0.92.
The consensus EPS estimate of $3.90 for fiscal 2022 represents a 2.8% improvement year-over-year. Its revenue for fiscal 2022 is expected to increase 1.9% year-over-year to $2.92 billion. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has declined 18% to close the last trading session at $37.73.
HI’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
HI is also rated a B in Growth, Value, Sentiment, and Quality. Within the A-rated Industrial – Manufacturing industry, it is ranked #2 of 36 stocks.
Click here to see the additional POWR Ratings of HI for Stability and Momentum.
Myers Industries, Inc. (MYE)
MYE is an international manufacturing and distribution company engaged in the distribution of tire service supplies. It operates through The Material Handling and Distribution segments and sells its products under the Akro-Mils, Jamco, Ameri-Kart, and Trilogy Plastics brands, among others.
On June 1, 2022, MYE announced the acquisition of Mohawk Rubber Sales of New England Inc. MYE’s President and CEO Mike McGaugh said, “Mohawk’s business model is similar to our own, and this transaction is another example of our team’s ability to find accretive opportunities to expand and grow our businesses – accelerating our progress against Horizon 1 of our 3-horizon strategy.”
On May 12, 2022, MYE announced the acquisition of Decatur-based rotational molding manufacturing assets of Step2 Co, LLC. This acquisition will help enhance its rotational molding capabilities. “The addition of this Decatur rotational molding location represents another milestone in the execution of our long-term strategy that is unlocking additional growth and expansion opportunities to serve our customers,” McGaugh said.
In the second quarter ended June 30, 2022, MYE’s net sales increased 24.4% year-over-year to $233.15 million. Its gross margin was 32%, compared to 29.4% in the year-ago period. The company’s adjusted net income increased 58.9% year-over-year to $16.58 million. In addition, its adjusted EPS came in at $0.45, representing an increase of 55.2% year-over-year.
Analysts expect MYE’s revenue and EPS for the quarter ended September 30, 2022, to increase 12.4% and 41.3% year-over-year to $224.8 million and $0.33, respectively. In addition, MYE shows a commendable earning surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has declined 16% to close the last trading session at $17.06.
MYE’s promising outlook is reflected in its POWR Ratings. MYE has an overall rating of B, which translates to a Buy. It is ranked #6 in the same industry. It has a B grade for Growth and Quality.
We have also given MYE grades for Value, Momentum, Stability, and Sentiment. Get all MYE ratings here.
Vishay Precision Group, Inc. (VPG)
VPG designs, manufactures, and markets specialized sensors, weighing solutions, and measurement systems. It operates through three segments: Sensors, Weighing Solutions, and Measurement Systems. The company offers its products under the Alpha Electronics, Powertron, Celtron, and Revere brands, among others.
On August 8, 2022, VPG’s Board of Directors approved a stock repurchase plan, authorizing the company to repurchase up to 600,000 shares of its outstanding common stock in aggregate. This stock repurchase plan reflects the company’s strong cash flows and commitment to enhancing shareholder value.
For the fiscal second quarter ended July 2, 2022, VPG’s net revenue increased 17.6% year-over-year to $88.61 million. Its non-GAAP gross profit rose 19.3% from the year-ago value to $38.01 million. The company’s non-GAAP net earnings increased 39% year-over-year to $9.33 million, while its non-GAAP EPS grew 38.8% from the prior-year quarter to $0.68.
Analysts expect VPG’s revenue and EPS for the quarter ended September 30, 2022, to increase 12.7% and 76.9% year-over-year to $92.42 million and $0.69, respectively. Over the past three months, the stock has gained 13.1% to close the last trading session at $31.35.
VPG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It is ranked first in the same industry. It has an A grade for Sentiment and a B for Growth, Value, Stability, and Quality.
Click here to see VPG’s rating for Momentum.
HI shares were unchanged in after-hours trading Monday. Year-to-date, HI has declined -23.42%, versus a -21.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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