The U.S. metal industry has witnessed significant growth and transformation over the years, driven by technological advancements, evolving market demands, and strategic investments.
We assess Valmont Industries, Inc. (VMI), Anglo American plc (NGLOY), and CompoSecure, Inc. (CMPO) as appropriate metal stocks to invest in to capitalize on the industry tailwinds.
According to Allied Market Research, the global metal and metal-manufactured products market is projected to reach $18.50 trillion by 2030, registering a CAGR of 5.2%.
Further, the U.S. government has allocated $6 billion from the Bipartisan Infrastructure Law and Inflation Reduction Act for investments in metals and energy projects, aiming to boost sustainable finance and decarbonization efforts.
The funding will support initiatives across various sectors, including aluminum and copper recycling and projects to decarbonize iron and steelmaking. These initiatives target hard-to-abate industries responsible for significant greenhouse gas emissions.
Given this backdrop, let’s delve deeper into the fundamentals of the three stocks from the Industrial – Metals industry, starting with the third in line.
Stock #3: Valmont Industries, Inc. (VMI)
VMI produces and sells metal products internationally. The company operates through two segments: Industrial and Agricultural. It has a diverse portfolio of products ranging from pre-stressed concrete, composite, and hybrid structures for lighting, transportation, and telecommunications equipment to surface coatings to prevent corrosion of metals.
In November 2023, VMI announced an accelerated share repurchase agreement worth $120 million under its existing share repurchase program.
VMI’s forward non-GAAP P/E of 14.80x is 21.4% lower than the industry average of 18.82x. Its forward P/S multiple of 1.08 is 27.8% lower than the industry average of 1.50.
During the fiscal fourth quarter that ended December 30, 2023, VMI’s net sales amounted to $1.02 billion. Its adjusted gross profit and operating income stood at $282.94 million and $100.20 million. As of December 30, its cash and cash equivalents came in at $203.04 million, compared to $185.41 million as of December 31, 2022.
The consensus revenue estimate of $4.29 billion for the year ending December 2025 represents a 5.1% increase year-over-year. The consensus EPS estimate of $16.27 for the same year reflects a 10.1% year-over-year rise. The company surpassed EPS estimates in each of the four trailing quarters, which is notable.
The stock lost marginally intraday to close the last trading session at $218.59.
VMI’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A for Momentum and is ranked #8 in the 34-stock Industrial- Metals industry.
Click here to see VMI’s additional Sentiment, Value, Growth, Stability, and Quality grades.
Stock #2: Anglo American plc (NGLOY)
Headquartered in London, the United Kingdom, NGLOY is a global mining company that explores rough and polished diamonds, copper, platinum group metals, and metallurgical and thermal coal. Top 4 Metal Stocks Poised for Breakthroughs
NGLOY’s forward non-GAAP P/E of 6.59x is 60.7% lower than the industry average of 16.77x. Its forward P/B multiple of 0.52 is 71.7% lower than the industry average of 1.83.
With a four-year average dividend yield of 6.14%, the company distributes an annual dividend of $0.41, which yields 3.35% on the current market price.
In the fiscal year ended December 2023, NGLOY generated revenue of $30.65 billion. Its underlying EBITDA came in at $9.96 billion. Profit attributable to equity shareholders of the company stood at $283 million, and underlying EPS amounted to $2.42.
Analysts expect NGLOY’s EPS to rise 54.7% year-over-year to $1.86 in the fiscal year 2024.
The stock has gained 7.8% over the past month to close the last trading session at $12.24.
NGLOY’s positive outlook is reflected in the POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Value and Sentiment. Within the same industry, it is ranked #7.
In addition to the POWR Ratings highlighted above, NGLOY’s Growth, Stability, Momentum, and Quality grades are available here.
Stock #1: CompoSecure, Inc. (CMPO)
CMPO creates top-tier metal, composite, and proprietary financial transaction cards worldwide. It also offers an Arculus Cold Storage Wallet for secure digital asset management and serves financial institutions, card manufacturers, and security experts globally.
CMPO’s forward non-GAAP P/E of 6.39x is 74.4% lower than the industry average of 25.01x. Its forward P/S multiple of 0.34 is 88.2% lower than the 2.89 industry average.
CMPO's revenue met analyst expectations in the fiscal third quarter, while its EPS exceeded estimates by 41%. During the fiscal fourth quarter ended December 31, 2023, CMPO generated net sales of $99.90 million, up 6.5% year-over-year. Its income from operations rose 18.6% from the year-ago quarter to $30.53 million. The company’s adjusted net income grew 30.3% and 30% year-over-year to $23.06 million and $0.26 per share. Its adjusted EBITDA improved 21.6% from the previous year's quarter to $37.18 million.
CMPO anticipates fiscal year net sales of $408 million to $428 million, with adjusted EBITDA of $147 million to $157 million.
Street anticipates CMPO’s EPS and revenue to rise 6.6% and 3.8% year over year to $0.25 and $98.92 million in the fiscal quarter ending March 2024.
The stock has soared 28.7% year-to-date, closing the last trading session at $6.95.
CMPO’s rosy prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Growth and a B for Value and Quality. It is ranked #3 in the same industry.
Click here to access CMPO’s Momentum, Stability, and Sentiment grades.
What To Do Next?
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NGLOY shares were trading at $12.16 per share on Tuesday afternoon, down $0.08 (-0.68%). Year-to-date, NGLOY has declined -1.08%, versus a 9.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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