4 Industrial Equipment Stocks Begging to Be Bought Right Now
The industrial sector is regaining momentum as the resumption in economic activities fuels industrial production. Furthermore, President Biden’s plan...
The industrial sector is regaining momentum as the resumption in economic activities fuels industrial production. Furthermore, President Biden’s plan to rebuild and reshape U.S. infrastructure, which is due to be voted on in Congress next week, is expected to provide a solid boost to the sector. Therefore, we think it could be wise to bet on fundamentally sound industrial equipment stocks Standex International (SXI), Lawson Products (LAWS), Preformed Line Products (PLPC), and LSI Industries (LYTS). These stocks are rated ‘Strong Buy’ in our proprietary rating system. Read on.
As the U.S. economy has recovered from the crippling effects of the COVID-19 pandemic this year, the resumption in activities has been driving the industrial equipment sector’s rebound. With industries rapidly embracing new methods of conducting business and trying to effectively engage with customers digitally, there has been a substantial uptick in demand for solutions provided by equipment manufacturers.
In August, total industrial output climbed 0.3% to 5.9%, while industry capacity utilization increased 0.2% to 76.4%, compared to respective pre-pandemic levels. Investor optimism in the sector is evidenced by the Industrial Select Sector SPDR ETF’s (XLI) 14.4% returns year-to-date.
Furthermore, the U.S. House of Representatives is approaching a Monday deadline to vote on a bipartisan infrastructure spending bill, which, if approved, should propel the growth of the industrial equipment market. So, we think it could be wise to bet on industrial equipment stocks Standex International Corporation (SXI), Lawson Products Inc. (LAWS), Preformed Line Products Company (PLPC), and LSI Industries Inc. (LYTS). These stocks are well-positioned to capitalize on the industry tailwinds and deliver solid returns in the near term.
Standex International Corporation (SXI)
SXI, together with its subsidiaries, manufactures and distributes a variety of commercial and industrial products and services in the United States and worldwide. Electronics; Engraving; Scientific; Engineering Technologies; and Specialty Solutions are its five operational segments. SXI is based in Salem, N.H.
SXI’s net sales increased 26.6% year-over-year to $176.44 million in its fourth fiscal quarter, ended June 30, 2021. Its operating income grew 121.4% from its year-ago value to $22.42 million, while its net income surged 660.2% from the prior-year quarter to $13.95 million. In addition, the company’s EPS increased 660% from its year-ago value to $1.14.
A $5.24 consensus EPS estimate for the current year represents a 13.9% improvement year-over-year. Furthermore, SXI has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Analysts expect SXI's revenue to increase 5.8% year-over-year to $694.04 million in its fiscal year 2021. The stock has gained 69.7% in price over the past year and 33.4% over the past nine months.
SXI’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SXI is rated a B grade for Sentiment, Growth, and Quality. Within the B-rated Industrial -Equipment industry, it is ranked #7 of 93 stocks.
To see additional POWR Ratings for Value, Stability, and Momentum for SXI, click here.
Lawson Products Inc. (LAWS)
Chicago-based LAWS is a distributor of maintenance, repair, and operations products and services to the industrial, commercial, institutional, and government markets in the United States and Canada. The company operates through two segments: Lawson and Bolt. It caters to automobile repair, commercial vehicle maintenance, government, manufacturing, construction, oil and gas, mining, and other sectors.
For the second quarter, ended June 30, 2021, LAWS’ net sales increased 47.7% year-over-year to $106.54 million. Its operating income grew 494.4% year-over-year to $3.38 million over this period. The company’s net income surged 374.2% from its year-ago value to $2.94 million, while its EPS increased 342.9% from the prior-year quarter to $0.31.
Analysts expect LAWS’ revenue to increase 19.9% year-over-year to $421.69 million in its fiscal year 2021. In addition, the company's EPS is expected to grow 34.1% in the current year. Over the past year, the stock has gained 23.2%.
LAWS' POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. LAWS is also rated an A grade for Growth, and a B for Momentum and Quality. Within the Industrial -Equipment industry, it is ranked #6 of 93 stocks.
In total, we rate LAWS on eight different levels. Click here to see additional POWR Ratings for Value, Sentiment, and Stability for LAWS.
Preformed Line Products Company (PLPC)
PLPC designs and manufactures products and systems for the energy, telecommunications, cable operator, information, and other sectors used in the building and maintenance of overhead, ground-mounted, and subterranean networks. PLPC is headquartered in Mayfield Village, Ohio.
Last month, PLPC unveiled its new platform, which emphasizes its long-standing dedication to providing precision-engineered solutions, high-quality products, and unmatched customer service. The company also introduced several new visual identity elements to complement the new platform, including a revised color palette, corporate typeface, and brand logo.
PLPC’s net sales increased 13.1% year-over-year to $13.1 million in the second quarter, ended June 30, 2021. Its gross profit grew 8.8% from its year-ago value to $43.04 million. The company reported $8.87 million in net income, while its EPS came in at $1.8 over this period. PLPC's stock has gained 29.7% in price over the past year.
It is no surprise that PLPC has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Value, Stability, and Momentum. In the Industrial -Equipment industry, it is ranked #3 of 93 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the PLPC ratings for Sentiment, Growth, and Quality.
LSI Industries Inc. (LYTS)
LYTS manufactures, markets, and sells corporate visual image solutions in the United States, Canada, Mexico, Australia, and Latin America. Lighting and Graphics are the Cincinnati, Ohio company’s two business segments.
In May, LYTS acquired privately held JSI Store Fixtures, a market-leading retail, commercial display solutions provider, from RFE Investment Partners for $90 million in cash. The acquisition might enable the company to expand its market presence in the grocery and convenience store verticals, and further drive its revenue growth.
During its fourth fiscal quarter, ended June 30, 2021, LYTS’ net sales increased 53% year-over-year to $97.02 million. Its gross profit grew 45.3% to $22.90 million over this period. The company’s adjusted EBITDA surged 49% year-over-year to $6.82 million.
LYTS is expected to generate 21.7% revenue growth year-over-year to $384.18 million in the current year. In addition, its EPS is estimated to increase 66.7% in 2021. Over the past year, LYTS' stock has gained 9.8% in price
LYTS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Momentum and Sentiment, and a B for Growth and Value. In the Industrial -Equipment industry, it is ranked #12 of 93 stocks.
Beyond what we've stated above, we have also given LYTS grades for Stability and Quality. Get all the LYTS ratings here.
SXI shares were trading at $99.94 per share on Friday morning, up $0.09 (+0.09%). Year-to-date, SXI has gained 29.92%, versus a 19.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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