The industrial sector has thrived due to steady demand and is evolving rapidly amid growing demand for enhanced quality and high productivity. So, let’s take a closer look at quality industrial stocks General Electric Company (GE) and Core Molding Technologies, Inc. (CMT), that are currently trading under $100 and are worth your investment.
The growing market for AR and digital technologies is boosting the growth of industrial automation. The adoption of industrial automation is increasing in the pharmaceuticals, chemicals, and oil and gas sectors. The global industrial automation market is expected to grow at a CAGR of 7.2% to $81.40 billion by 2033.
Moreover, as smart manufacturing is gaining traction, the sales of industrial gearboxes, a critical component in the industrial automation process, is increasing. With the growth of the robotics industry and the emergence of new technologies, the industrial gearbox market is expected to grow at a 5.1% CAGR until 2033.
Additionally, increased institutional capital spending on a global scale and investments in residential and commercial infrastructure are significant factors creating opportunities for construction equipment manufacturers. The global construction equipment market is expected to grow at a CAGR of 6% until 2029.
Let’s discuss the stocks mentioned above in detail:
General Electric Company (GE)
GE operates as a high-tech industrial company in Europe, China, Asia, the Americas, the Middle East, and Africa. It offers gas and steam turbines, a full balance of plant, upgrade, and service solutions, as well as data-leveraging software for power generation, industrial, government, and other customers.
On March 7, GE announced a new order for its first High-Efficiency upgrade for the GT26 fleet to be selected in Australia. In 2024, GE will modernize Energy Australia’s Tallawarra, a power plant powered by a GT26 gas turbine installed nearly thirteen years ago, with the HE upgrade, a proven solution that was first introduced for the GT26 gas turbine in 2019.
On February 7, GE announced that it had signed a multiyear strategic collaboration agreement with Amazon Web Services, Inc. aimed at helping utilities accelerate grid modernization.
Through this collaboration, GE and AWS plan to deliver intelligent grid orchestration solutions. These software solutions will help utilities digitally transform, modernize the power grid, and accelerate the energy transition.
In terms of trailing-12-month cash from operations, GE is trading at $5.92 billion, which is significantly higher than the industry average of $194.43 million. Its trailing-12-month Levered FCF margin of 5.05% is 19% higher than the 4.24% industry average.
On February 10, GE announced a dividend of $0.08 per share, payable on April 25, 2023.
GE pays $0.32 as dividends annually, translating to a 0.35% yield at the current price. Its four-year average dividend yield is 0.60%. Its dividend payments have grown at a CAGR of 2.3% over the past three years.
GE’s adjusted revenue increased 7.8% year-over-year to $21.01 billion in the fiscal fourth quarter that ended December 31, 2022. The company’s adjusted profit increased 37.3% year-over-year to $2.16 billion, whereas adjusted earnings increased 51.8% year-over-year to $1.36 billion. Its adjusted EPS came in at $1.24, representing an increase of 51.2% from the year-ago quarter.
GE’s revenue is expected to be $13.54 billion for the current fiscal quarter ending March 2023. The company’s EPS for the same quarter is expected to be $0.13. Additionally, GE has topped consensus revenue estimates in three of the trailing four quarters, which is impressive.
Shares of GE have gained 74.6% over the past nine months to close the last trading session at $89.92. It has gained 37.5% year-to-date.
GE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Growth and Momentum. Within the A-rated Industrial - Manufacturing industry, it is ranked #9 out of 34 stocks.
Beyond what is stated above, we’ve also rated GE for Value, Stability, Sentiment, and Quality. Get all GE ratings here.
Core Molding Technologies, Inc. (CMT)
CMT operates as a molder of thermoplastic and thermoset structural products primarily for North America and Mexico’s building products, utilities, transportation, and power sports industries.
In terms of trailing-12-month ROTC, CMT is trading at 7.84%, 13.9% higher than the industry average of 6.89%. Its trailing-12-month asset turnover ratio of 1.96x is 158.4% higher than the 0.76x industry average.
CMT’s total net sales increased 18.1% year-over-year to $86.44 million in the fourth quarter that ended December 31, 2022. Its gross margin grew 36.2% from the year-ago value to $11.55 million, while its adjusted EBITDA increased 22.6% year-over-year to $6.06 million.
Moreover, net income increased 995.7% year-over-year to $4.83 million, whereas its net income per common share increased significantly from its year-ago value to $0.57.
The consensus EPS estimate of $1.45 for the current fiscal year 2023 indicates a marginal improvement year-over-year. The consensus revenue estimate of $384.77 million for the same period indicates a rise of 2% year-over-year.
The stock has gained 80.5% over the past nine months and closed its last trading session at $16.62. It has gained 44.4% over the past year.
CMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
CMT has been rated an A for Sentiment and a B in Value and Quality. Within the same industry, it is ranked #2.
Click here to access additional POWR Ratings for Growth, Momentum, and Stability for CMT.
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GE shares rose $1.07 (+1.19%) in premarket trading Tuesday. Year-to-date, GE has gained 77.22%, versus a 2.96% rise in the benchmark S&P 500 index during the same period.
About the Author: NidhiAgarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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