The industrial sector has been hampered by weak global demand and trade conflicts, which have slowed growth. However, technological developments and infrastructure expansion will likely boost future growth and productivity in the sector.
So, quality industrial stocks CRH plc (CRH), United States Lime & Minerals, Inc. (USLM), and Argan, Inc. (AGX) could be worth adding to your portfolios.
The global building materials market is expected to reach $1.70 trillion by 2030, exhibiting a CAGR of 3.9%. The demand for building materials is increasing as a result of government investments in infrastructure construction, such as public buildings, utilities, and transportation networks.
Moreover, the generative AI in the construction market is estimated to be worth about $1.95 billion by 2032, rising at a 34.9% CAGR. Using algorithmic designs, generative AI in construction optimizes and innovates construction components, assisting architects, designers, and engineers in decision-making. It enables interactive exploration, feedback, parameter adjustment, and leading systems to desired results.
In addition, the Industry 4.0 market is expected to grow at a CAGR of 20.7% until 2032. Investors’ interest in industrial stocks is evident from the Invesco Dynamic Building & Construction ETF’s (PKB) 24.4% returns over the past six months.
Take a detailed look at the stocks mentioned above:
CRH plc (CRH)
Headquartered in Dublin, Ireland, CRH manufactures and distributes building materials in Ireland and internationally. It operates through three segments, Americas Materials; Europe Materials; and Building Products.
CRH’s trailing-12-month ROTA of 8.51% is 112.8% higher than the industry average of 4%. Its trailing-12-month net income margin of 11.76% is 80.7% higher than the 6.51% industry average.
CRH has paid dividends for 29 consecutive years. Over the last three years, CRH’s dividend payouts have grown at 11.8% CAGR. CRH’s four-year average dividend yield is 2.57%. Its forward annual dividend of $2.06 translates to a 3.55% yield.
During the fiscal year that ended December 31, 2022, CRH’s revenue increased 12% year-over-year to $32.72 billion. Its group profit for the financial year increased 47.8% year-over-year to $3.87 billion, and earnings per ordinary share increased 54.3% year-over-year to $5.73.
The consensus revenue estimate of $35.35 billion for the year ending December 2024 represents a 4.4% increase year-over-year. Its EPS is expected to grow at 10.2% year-over-year to $3.92 for the same period. CRH’s shares have gained 47.6% over the past year to close the last trading session at $58.10.
CRH’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CRH has an A grade for Momentum and a B for Stability. It is ranked #12 out of 48 stocks in the A-rated Industrial - Building Materials industry. Click here for the additional POWR Ratings for Value, Sentiment, Growth, and Quality for CRH.
United States Lime & Minerals, Inc. (USLM)
USLM manufactures and supplies lime and limestone products in the United States. It extracts limestone from open-pit quarries and an underground mine and processes it as pulverized limestone, quicklime, hydrated lime, and lime slurry.
USLM’s trailing-12-month ROTA of 15.74x is 293.5% higher than the industry average of 4x. Its trailing-12-month net income margin of 23.86% is 266.7% higher than the industry average of 6.51%.
USLM has paid dividends for eight consecutive years. Over the last three years, USLM’s dividend payouts have grown at 10.7% CAGR. USLM’s four-year average dividend yield is 2.14%. Its forward annual dividend of $0.80 translates to a 0.37% yield.
For the fiscal second quarter that ended June 30, 2023, USLM’s revenues rose 22.3% year-over-year to $73.98 million, while its gross profit improved 64.6% year-over-year to $27.13 million.
The company’s net income and EPS increased 92.5% and 91.7% from the prior-year quarter to $19.71 million and $3.45, respectively. In addition, its operating profit grew 80.6% from the year-ago value to $22.81 million.
The stock has gained 102.3% over the past year to close the last trading session at $215.
It’s no surprise that USLM has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Momentum and Quality and a B grade for Growth, Stability, and Sentiment. It is ranked #10 in the same industry.
Beyond what is stated above, we’ve also rated USLM for Value. Get all USLM ratings here.
Argan, Inc. (AGX)
AGX provides engineering, procurement, construction, commissioning, maintenance, project development, technical, and consulting services to the power generation market. The company operates through Power Industry Services; Industrial Fabrication and Field Services; and Telecommunications Infrastructure Services segments.
AGX’s trailing-12-month ROTC of 7.69% is 11.7% higher than the industry average of 6.88%, while its trailing-12-month ROTA of 5.83x is 14.7% higher than the industry average of 5.08x.
AGX has paid dividends for four consecutive years. AGX’s four-year average dividend yield is 3.59%. Its forward annual dividend of $1 translates to a 2.47% yield.
AGX’s revenue for the first quarter of fiscal 2024 (ended April 30, 203) increased 3.4% year-over-year to $103.68 million, while its net income amounted to $2.11 million and $0.16 per share.
Also, its total current liabilities came in at $192.40 million for the period that ended April 30, 2023, compared to $202.50 billion for the period that ended January 31, 2023. Its total current liabilities came in at $197.75 million, compared to $208.59 million for the same period.
Street expects AGX’s revenue to increase 28.6% year-over-year to $585.35 million for the year ending January 2024. Its EPS is expected to grow at 21.7% year-over-year to $2.84 for the same period. Over the past year, the stock has gained 9.7% to close the last trading session at $40.45.
AGX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #13 in the same industry. It has a B grade for Momentum, Sentiment, and Quality. To see additional AGX ratings for Growth, Value, and Stability, click here.
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CRH shares rose $0.07 (+0.12%) in premarket trading Monday. Year-to-date, CRH has gained 49.19%, versus a 17.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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