The resurgence of COVID-19 cases due to the rapid spread of the highly contagious Delta variant has been a significant concern for investors looking to benefit from the economic recovery. However, Goldman Sachs Group, Inc. (GS) equity strategist David Kostin said recently that “the new strain should not pose a major market risk.”
The Federal Reserve’s near-zero interest rates, a rapid vaccination program, and supportive government policies have boosted the industrial sector’s growth. Furthermore, U.S. Senators unveiled a nearly $1 trillion bipartisan infrastructure package yesterday, which includes $550 billion in new spending for roads, rails, and bridges, among other infrastructure. This proposed spending is expected to help the sector grow significantly in the coming months.
Given this backdrop, the shares of fundamentally strong industrial companies Vale S.A. (VALE), CEMEX, S.A.B. de C.V. (CX), Owens Corning (OC), and ITT Inc. (ITT) should soar. So, if one has current plans to invest $1,000, we believe buying these three stocks could be rewarding.
Vale S.A. (VALE)
Based in Rio de Janeiro, Brazil, VALE produces and sells iron ore and iron ore pellets for raw materials in steelmaking internationally. The company operates through three segments: Ferrous Minerals; Base Metals; and Coal.
On June 29, 2021, VALE announced a CAD150 million investment to extend current mining activities in Thompson, Manitoba, by 10 years. Mark Travers, Executive Vice-President for Base Metals, said, “The global movement to electric vehicles, renewable energies, and carbon reduction has shone a welcome spotlight on nickel, positioning the metal we mine as a key contributor to a greener future and boosting world demand.”
The company’s net operating revenue increased 121.8% year-over-year to $16.67 billion for its fiscal second quarter ended June 30, 2021. Its adjusted EBITDA grew 227.4% year-over-year to $11.04 billion, while its net income increased 662.4% year-over-year to $7.59 billion. The company’s total assets increased 16.3% year-over-year to $96.72 billion.
VALE’s EPS is expected to increase 379.4% year-over-year to $5.13 in its fiscal year 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 64.6% year-over-year to $17.83 billion for the quarter ending September 30, 2021. Over the past nine months, the stock has gained 98.9% to close Friday’s trading session at $21.02.
VALE’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to a Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The stock has an A grade for Growth and Quality, and a B grade for Value, Momentum, and Sentiment.
Note that VALE is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
CEMEX, S.A.B. de C.V. (CX)
Headquartered in San Pedro Garza Garcia, Mexico, CX produces, markets, distributes and sells cement, ready-mix concrete, aggregates, and clinker worldwide. In addition, the company offers various complementary construction products, including asphalt products, concrete blocks, roof tiles, and concrete pipes.
CX announced the acquisition of a new floating bucket chain dredger in its Rogätz quarry on April 22, 2021. This investment aligns with the company's strategy to enhance its vertically integrated positions near growing metropolises. Also, this could further strengthen its operations in Germany.
The company’s net sales increased 33% year-over-year to $3.85 billion for the second quarter ended June 30, 2021. Its operating EBITDA grew 48% year-over-year to $818 million, while its free cash flow increased 241% year-over-year to $293 million. CX’s earnings per ADS increased 2,353% year-over-year to $0.18.
Analysts expect CX’s EPS and revenue to increase 186.7% and 10.9%, respectively, year-over-year to $0.78 and $14.39 billion in its fiscal year 2021. The stock’s price has soared 159.7% over the past year to close Friday’s trading session at $8.13.
CX’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. In addition, it has a B grade for Quality, Sentiment, Value, Growth, and Momentum. To see the additional POWR Rating for CX (Stability), click here. It is ranked #1 of 54 stocks in the A-rated Industrial - Building Materials industry.
Owens Corning (OC)
OC is a leading Fortune 500 company in the building and industrial materials space. It is based in Toledo, Ohio. Operating across 33 countries, the company manufactures and advances a range of insulation, roofing, and fiberglass composite materials. It mainly operates through three segments—Composites; Insulation; and Roofing.
On July 13, 2021, OC announced that it had acquired vliepa GmbH, which specializes in the coating, printing, and finishing of nonwovens, paper, and film for the building materials industry. The acquisition broadens OC’s global nonwovens portfolio to better serve European customers and accelerate building and construction market applications in the region.
OC’s net sales surged 38% year-over-year to $1.60 billion for its fiscal second quarter, ended June 30, 2021. Its adjusted EBIT grew 144.3% year-over-year to $408 million. Its adjusted earnings came in at $274 million, representing a 176.8% year-over-year increase. The company’s adjusted EPS was $2.60, up 185.7% year-over-year.
For its fiscal year 2021, analysts expect OC’s EPS to increase 52.6% year-over-year to $7.95. It surpassed the Street’s EPS estimates in each of the trailing four quarters. OC’s revenue is expected to be $2.07 billion for the quarter ending September 30, 2021, representing a 14.4% year-over-year rise. The stock’s price has surged 56.9% over the past year to close Friday’s trading session at $96.16.
OC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. In addition, it has a B grade for Growth, Momentum, Value, and Quality.
We have also graded OC for Sentiment and Stability. Click here to access all of OC’s ratings. OC is ranked #4 in the Industrial - Building Materials industry.
ITT Inc. (ITT)
ITT manufactures and sells engineered critical components and customized technology solutions for the energy, transportation, and industrial markets worldwide. The White Plains, N.Y. company operates through three segments: Motion Technologies; Industrial Process; and Connect & Control Technologies. The Industrial Process segment designs and manufactures industrial pumps and valves.
Enidine Industrial, a subsidiary of ITT, announced its expanded small-bore, shock-absorber line with the new Platinum Extended Range Series on July 26, 2021. Greg Herman, Global Commercial Leader, Enidine Industrial, said, "The expansion of our already popular small-bore, shock-absorber series gives us the ability to meet even more of our customers’ critical needs."
The company’s revenue increased 5.3% year-over-year to $698.40 million for its fiscal first quarter, ended March 31, 2021. Its operating cash flow grew 32.3% year-over-year to $70.80 million, while its adjusted segment operating income increased 26.9% year-over-year to $122.10 million. The company’s adjusted EPS increased 32.5% year-over-year to $1.06.
ITT’s EPS is expected to increase 24.1% year-over-year to $3.97 in its fiscal year 2021. It surpassed the consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 15% year-over-year to $666.13 million for the quarter ending September 30, 2021. Over the past year, the stock has gained 65.9% to close Friday’s trading session at $97.91.
It’s no surprise that ITT has an overall A rating, which equates to Strong Buy in our POWR Ratings system. In addition, the stock has an A grade for Growth and Sentiment, and a B grade for Quality. Click here to see ITT’s ratings for Value, Stability, and Momentum. ITT is ranked #6 of 84 stocks in the A-rated Industrial - Machinery industry.
VALE shares were trading at $21.43 per share on Monday afternoon, up $0.41 (+1.95%). Year-to-date, VALE has gained 36.09%, versus a 18.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.4 No-Brainer Industrial Stocks to Invest $1,000 In Right Now appeared first on StockNews.com