The resurgence of the COVID-19 cases due to the rapid spread of the highly contagious Delta variant has been worrying investors regarding the pace of economic growth. Furthermore, scientists in South Africa recently identified a new variant of the COVID-19virus—the C.1.2. variant. However, increasing vaccinations have so far been providing some relief.
The major stock market indexes soared earlier this month on investors’ optimism surrounding the full approval of Pfizer Inc. (PFE) and BioNTech SE’s (BNTX) COVID-19 vaccine. Also, the infrastructure bill passed by the Senate on August 10 is expected to act as a catalyst for the industrial sector’s growth. It includes roughly $73 billion for electric grid and power infrastructure and $66 billion for passenger and freight rail.
So, we think it could be wise to bet on quality industrial stocks nVent Electric plc (NVT), Applied Industrial Technologies, Inc. (AIT), and EnPro Industries, Inc. (NPO). They have overall A (Strong Buy) or B (Buy) ratings in our proprietary POWR Ratings system and A grades for Sentiment. Moreover, Wall Street analysts appear bullish on these three stocks.
Click here to check out our Industrial Sector Report for 2021
nVent Electric plc (NVT)
Headquartered in London, NVT produces and manufactures electrical connection and protective solutions. The company operates primarily through three segments: Enclosures; Thermal Management; and Electrical & Fastening Solutions. Also, it sells its products under various brand names, including CADDY, ERICO, HOFFMAN, and RAYCHEM.
On August 16, 2021, NVT announced its partnership with Power Resources International Inc. to provide rail and switch heating solutions to the North American transit industry. Mike Saini, the company’s regional sales manager, said, “The new collaboration of nVent and PRI already is providing the switch heating and contact rail heating solution to the Long Island Railroad (LIRR) Floral Park to Hicksville Line Third Track Extension Project.”
For the second quarter, ended June 30, 2021, NVT’s revenue increased 34.5% year-over-year to $601.30 million. The company’s operating income came in at $88.30 million, representing a 94.9% year-over-year rise. In addition, its net income increased 156.6% year-over-year to $66.20 million. Also, its EPS was $0.39, indicating a 160% year-over-year increase.
NVT’s revenue is expected to be $2.33 billion in its fiscal year 2021, representing a 16.4% year-over-year rise. The company’s EPS is expected to increase 24% year-over-year to $1.86 in the current year. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 76.4% in price to close yesterday’s trading session at $34.51. Wall Street analysts expect the stock to hit $41.83 in the near term, which indicates a potential 21% upside.
NVT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NVT has an A grade for Momentum and Sentiment, and a B grade for Growth and Quality. Within the B-rated Industrial-Equipment industry, it is ranked #21 of 91 stocks. Click here to see the additional POWR Ratings for Value and Stability for NVT.
Applied Industrial Technologies, Inc. (AIT)
One of the largest distributors and service providers of industrial motion and control technologies, AIT functions mainly through two segments: Service Center Based Distribution, and Fluid Power & Flow Control. The Cleveland, Ohio, company serves various industries, including agriculture and food processing, cement, forest products, industrial machinery, and equipment.
AIT acquired R.R. Floody Company, Inc. on August 19, 2021, a provider of automation products, services, and engineered solutions focused on machine vision, mobile and collaborative robotics, motion control, material handling, and digital capabilities. The acquisition is expected to help expand the company’s portfolio in the growing automation space.
AIT’s net revenue increased 23.6% year-over-year to $895.89 million for its fiscal fourth quarter, ended June 30, 2021. The company’s operating income increased 72.5% from the same period last year to $81.10 million. Its net income came in at $59.24 million, representing a 97.6% year-over-year rise, while its EPS came in at $1.51, up 96.1% year-over-year.
Analysts expect AIT’s revenue to be $3.54 billion in its fiscal 2022, representing a 9.4% year-over-year rise. The company’s EPS is expected to increase 21.4% year-over-year to $5.34 in the next year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 15.3% in price to close yesterday’s trading session at $90.40. Wall Street analysts expect the stock to hit $110.33 in the near term, which indicates a potential 22.1% upside.
It’s no surprise that AIT has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Sentiment, and a B grade for Momentum, Stability, and Quality.
AIT is ranked #18 in the Industrial-Equipment industry. Click here to see the additional POWR Ratings for AIT (Growth and Value).
EnPro Industries, Inc. (NPO)
Founded in 2002, Charlotte, N.C.-based NPO designs, develops, manufactures, markets, and services engineered industrial products. The company’s segments include Sealing Technologies; Advanced Surface Technologies; and Engineered Materials. Its Engineered Materials segment provides products used in the automotive, health, power generation, and general industrial markets.
NPO has announced a $0.27 per share quarterly dividend, payable on September 15, 2021. Also, the company has consistently increased its dividend for the past six years. This represents its financial strength.
NPO’s total revenue increased 20.9% year-over-year to $298.60 million for its fiscal second quarter, ended June 30, 2021. The company’s operating income came in at $31.90 million, up 1,672.2% year-over-year. Its net income in the quarter was $29.30 million, versus a $6.50 million loss in the year-ago period. Also, its EPS came in at $1.41 compared to a $0.31 loss per share in the prior year’s quarter.
For its fiscal year 2022, analysts expect NPO’s revenue and EPS to increase 6.7% and 8.1%, respectively, year-over-year to $1.20 billion and $5.87. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 22.7% in price to close yesterday’s trading session at $86.90. Wall Street analysts expect the stock to hit $112.50 in the near term, which indicates a potential 29.5% upside.
NPO’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Sentiment, and a B grade for Growth and Stability.
Click here to see NPO’s ratings for Value, Momentum, and Quality as well. Again, NPO is ranked #15 in the Industrial-Equipment industry.
Click here to check out our Industrial Sector Report for 2021
NVT shares were trading at $34.61 per share on Tuesday morning, up $0.10 (+0.29%). Year-to-date, NVT has gained 51.43%, versus a 21.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.
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