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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Reasons HY is Risky and 1 Stock to Buy Instead

HY Cover Image

What a brutal six months it’s been for Hyster-Yale Materials Handling. The stock has dropped 27.8% and now trades at $45.09, rattling many shareholders. This may have investors wondering how to approach the situation.

Is now the time to buy Hyster-Yale Materials Handling, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Even with the cheaper entry price, we don't have much confidence in Hyster-Yale Materials Handling. Here are three reasons why HY doesn't excite us and a stock we'd rather own.

Why Is Hyster-Yale Materials Handling Not Exciting?

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE: HY) designs, manufactures, and sells materials handling equipment to various sectors.

1. Long-Term Revenue Growth Disappoints

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Hyster-Yale Materials Handling’s sales grew at a tepid 5.5% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector. Hyster-Yale Materials Handling Quarterly Revenue

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Hyster-Yale Materials Handling’s revenue to drop by 5.4%, a decrease from its 10.2% annualized growth for the past two years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.

3. Breakeven Free Cash Flow Limits Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Hyster-Yale Materials Handling broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.

Hyster-Yale Materials Handling Trailing 12-Month Free Cash Flow Margin

Final Judgment

Hyster-Yale Materials Handling’s business quality ultimately falls short of our standards. After the recent drawdown, the stock trades at 8.5× forward price-to-earnings (or $45.09 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere. We’d recommend looking at one of our top software and edge computing picks.

Stocks We Would Buy Instead of Hyster-Yale Materials Handling

The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.

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