Here’s Why Trimble Could Blast Higher in the Coming Months

The impact of technological breakthroughs aren’t always easy to appreciate when they’re emerging but with the benefit of hindsight, we can fully understand their significance.

Think about Steve Jobs introducing the first Apple (AAPL) iPhone in 2007, which has changed multiple aspects of how people live, socialize, and do business. Or, Amazon (AMZN) launching AWS which made high-power computing affordable and accessible for everybody. 

I believe a similar breakthrough is Elon Musk and SpaceX’s successful space launch, which is lowering the cost of space travel and exploration. Many analysts believe that space will be the next great investing frontier and has the potential to grow into more than a $1 trillion industry over the next decade. While there are a variety of stocks that will benefit from this trend, I believe that Trimble, Inc. (TRMB) is the best choice.    

Company Background

Trimble was founded in November 1978 in Sunnyvale, California. It produces hardware, software, and services for customers in various industries including Agriculture, Building & Construction, Geospatial, Natural Resources and Utilities, Governments, Transportation, and others. 

The company is likely to benefit from growth in the space economy as it produces Global Navigation Satellite System (GNSS) receivers and scanners that are necessary for spaceflight. In fact, TRMB is the largest holding in Cathie Wood’s newest ETF, the Space Exploration and Innovation ETF (ARKX) with an 8.9% weight. It’s also the second-largest holding in the Procure Space ETF (UFO).

Growth Story

Cathie Wood’s belief in the stock should intrigue any growth investor as she has successfully invested in some of the hottest growth stocks in the past couple of years including Tesla (TSLA), Zoom (ZM), and NIO (NIO). She tends to take a long-term view and seeks out opportunities that should generate annual returns of more than 15% over the next decade.

Beyond the space industry, the company’s exposure to other industries should provide a growth boost as well. The company’s products are used by construction companies, so this segment is growing fast as the economy recovers. It should also receive a boost from the infrastructure bill.

Additionally, the company has significant exposure to the agriculture industry as its products are used by farmers to gain data that helps them make better decisions in terms of evaluating their crops, watering, planting placement and timing. Countries like India and China are focused on making their farms more productive, as they lag badly behind the US. Therefore, increasing spending on ag tech from these countries is another potential catalyst for the stock.

POWR Ratings

Given TRMB’s strong position in a variety of industries and upside potential due to the space industry, it’s not surprising that the stock is rated a B by the POWR Ratings which equates to a Buy rating. B-rated stocks have posted an average annual performance of 19.7% which compares favorably to the S&P 500’s average annual gain of 7.1%.

The POWR Ratings are calculated by weighing 118 different factors, each with its own weight. It also evaluates stocks by various components. The stock has Bs for Stability and Sentiment. This isn’t surprising considering the stock has reliable, recurring revenue from customers like Caterpillar (CAT), Deere (DE), SpaceX, and NASA. Wall Street analysts are also bullish on the stock as the stock has no Sell Ratings.

Conclusion

TRMB is an ideal growth stock as it has major upside due to its exposure to the space industry. At the same time, it has steady revenue growth from its existing businesses which should continue given strength in construction, agricultural, and industrial production.

Despite this attractive growth picture, the stock is not overvalued, as its forward P/E is 30.2. This combination of value and growth in addition to backing from this generation’s most successful growth investor is a good reason to consider adding TRMB to your portfolio. 

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TRMB is just one of the stocks in my POWR Growth portfolio. That's where I  combine my many years of investing experience with the Top 10 Growth Stocks strategy, which has +46.42% annual returns, to bring investors the best growth stocks for today's market. 

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TRMB shares fell $0.04 (-0.04%) in premarket trading Monday. Year-to-date, TRMB has gained 33.29%, versus a 19.64% rise in the benchmark S&P 500 index during the same period.

Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of POWR Growth newsletter. Learn more about Jaimini’s background, along with links to his most recent articles.

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