3 Industrial Stocks Headed for Economic Recovery

The industrial sector is gaining momentum as the global economic recovery takes shape thanks to infrastructure investments, domestic stockpiling and increased manufacturing activities. The adoption of advanced technologies such as artificial intelligence, machine learning and smart devices is also one of the reasons why industrial stocks are well positioned for growth.

In this environment, investors who want to invest in the industrial sector are looking for Honeywell International Inc. can evaluate stocks such as. (sweetie), Franklin Electric Co., Inc. (FELE) and Gorman-Rupp Company (GRC), are well positioned in this economic recovery environment.

Major infrastructure spending initiatives, such as the U.S. Infrastructure Investment and Jobs Act and the Inflation Reduction Act, directly fuels industrial growth. These projects require heavy investments in construction equipment, transportation systems and manufacturing.

The industrial and services (I&S) sector is expected to see a steady pace of deal activity throughout the remainder of 2024. Expected to increase Merger and Acquisition (M&A) activity. The rapid pace of technological change continues to drive merger and acquisition activity as companies seek to acquire new technologies to enhance their product offerings, enhance their internal operations, and enter new markets.

Additionally, the global Industry 4.0 market is projected to reach $482 billion by 2032. Compound Growth Rate of 20.7%.

Industrial stocks are likely to continue their upward trend as the economic recovery strengthens. Analysts predict steady growth fueled by ongoing infrastructure improvements, technological innovations and the green energy revolution.

Keeping these positive market trends in mind, let’s look at the fundamentals of the above-mentioned stocks.

Honeywell International Inc. (sweetie)

HON is engaged in aerospace technologies, building automation, energy and sustainable solutions and industrial automation businesses worldwide. It operates in four divisions: Aviation; Honeywell Building Technologies; Performance Materials and Technologies; and Security and Productivity Solutions.

On November 22, HON announced the sale of its Personal Protective Equipment (PPE) business to Protective Industrial Products, Inc. (PIP), a portfolio company of Odyssey Investment Partners, for $1.325 billion in cash. This transaction will allow HON to simplify and optimize its business. It should also position HON to continue creating long-term value for shareholders.

Driven by strong financial performance, on September 27, the company announced a quarterly dividend of $1.13 per share, payable on December 6, 2024.

HON pays an annual dividend of $4.52, which represents a 1.97% yield on the current share price. The four-year average dividend yield is 2.08%. Additionally, the company’s dividend payments have increased at a CAGR of 5.4% over the past five years.

For the third quarter of 2024 ending September 30, HON’s net sales While the net sales of the Aerospace Technologies segment increased by 5.6% annually to $9.73 billion, the net sales of the Aerospace Technologies segment increased by 11.8% compared to the same period last year, reaching $3.91 billion.

Its attributable net income was $1.41 billion, while adjusted earnings per share for the quarter rose 8.4% year over year to $2.58. Additionally, the company’s free cash flow increased by 10.1% compared to last year, reaching $1.72 billion.

The Street expects HON’s revenue and EPS to grow 8.5% and 6.9% year over year, to $10.24 billion and $2.78, respectively, in the fiscal fourth quarter (ending December 2024). Additionally, it has surpassed consensus EPS estimates in each of the last four quarters, which is excellent.

The stock is up 19.2% over the past year, closing at $230.60 in the last trading session.

HON’s strong foundations, POWR Ratings. The stock has an overall rating of B, meaning Buy in our proprietary ratings system. POWR Ratings are calculated by considering 118 different factors, each optimally weighted.

HON has a B rating in Growth, Momentum, Stability and Responsiveness. It ranks 22nd out of 79 stocks in the A-rated rankings. Industrial – Machinery industry. Click here To access other HON ratings for Value and Quality.

Franklin Electric Co., Inc. (FELE)

FELE designs, manufactures and distributes water and fuel pumping systems worldwide. The company operates in three segments: Water Systems; Fuel Supply Systems; and Distribution.

On November 21, the company paid a quarterly dividend of $0.25 per common share. FELE pays an annual dividend of $1.00 with 30 years of consecutive dividend growth; This translates to a 0.92% return on the current share price. The four-year average dividend yield is 0.90%. Additionally, dividend payments have increased at CAGRs of 12.6% and 11.5% over the last three and five years, respectively.

On October 23, FELE announced that Headwater Companies’ Engineering Systems facility in Abernathy will be reorganized into the Global Water Systems segment. This move will allow FELE to increase its investment in water systems product innovation. Additionally, the realignment will support the availability of bespoke pumping solutions, packaged systems and after-market re-bowling services for turbines.

FELE’s net sales for the third quarter (ending September 30, 2024) were $531.44 million. It reported gross profit of $189.66 million, up 3.4% from the prior-year quarter. The company had attributable net income of $54.59 million and EPS of $1.17.

Analysts expect FELE’s revenue in the first quarter (ending March 2025) to rise 4.3% year over year to $480.66 million. However, the consensus earnings per share estimate of $0.81 for the same period indicates a 16.3% increase over the same period last year.

FELE shares are up 23% over the past year and 14.2% year-to-date, closing at $110.40 in the latest trading session.

FELE’s bright prospects are also reflected in the POWR Ratings. The stock has an overall rating of B, meaning Buy in our proprietary ratings system.

It also has a B rating for Momentum, Stability and Quality. within class B Industrial – Manufacturing It ranks 11th among 35 stocks in its sector. Click here To see FELE’s Growth, Value and Sentiment ratings.

Gorman-Rupp Company (GRC)

GRC designs, manufactures and sells pumps and pump systems internationally. The company’s products include self-priming centrifuge, standard centrifuge, magnetically driven centrifuge, axial and mixed flow, vertical turbine line shaft, submersible, high-pressure booster, rotary gear, diaphragm, bellows and oscillating pumps.

On October 25, the company announced its 299th consecutive quarterly dividend of $0.185 per common share, payable on December 10, 2024, demonstrating its commitment to returning value to shareholders.

GRC pays an annual dividend of $0.74, which represents a 1.74% yield based on the current share price. The four-year average dividend yield is 2.07%. Additionally, the company’s dividend payments have increased at a CAGR of 5.7% and 4.5% over the last five and three years, respectively.

On August 28, GRC introduced the Gorman-Rupp 6400 Series end-suction centrifugal pumps for aqueous suction applications. This launcher is affordable and durable with maximum versatility.

GRC’s net sales increased marginally to $168.18 million in the third quarter ended September 30, 2024, compared to the prior year. The company’s gross profit was $52.66 million, up 9.4% from the previous year’s quarter. Moreover, its non-GAAP adjusted earnings were $12.92 million and $0.49 per share, up 43.9% and 44.1%, respectively, from the same period last year.

The consensus revenue estimate of $162.84 million for the fiscal fourth quarter (ending December 2024) represents a marginal increase from last year. The $0.45 consensus EPS estimate for the same quarter indicates a 32.4% year-over-year improvement.

The stock has gained 35.7% in the past year, closing at $43.09 in the last trading session.

GRC’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A in our proprietary rating system, which equals Strong Buy.

It has an A rating for Emotion and a B rating for Momentum and Stability. The stock ranks #7 out of 79 stocks in the A-rated Industrial – Machinery sector. Click here To access additional GRC ratings (Growth, Value and Quality).

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HON shares were trading down $0.14 (-0.06%) at $230.46 per share on Tuesday afternoon. Since the beginning of the year, HON has gained 12.24% in value, compared to a 27.28% increase in the benchmark S&P 500 index in the same period.

About the Author: ShreyaRathi

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