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5 Industrial Products Stocks That Survived 2018 Sector Crash
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Year 2018 so far has been difficult for companies engaged in providing industrial equipment and services; metal fabrication; machinery; products made from textiles, rubber or plastics; and pollution control solutions. The Zacks Industrial Products sector — which includes such industrial stocks — seems to have lost its sheen in the year.
Troubling Year for Industrial Products
Collectively, the average share price of the constituent companies of the Industrial Products sector has declined 22.8% year to date against 25% growth recorded in 2017. Also, the sector’s performance was worse than S&P 500’s decline of 6.2%.
The sector currently lies in the bottom 38% of the Zacks sector list — holding the 10th position out of total 16. Over the last 10 years, using a one-week rebalance, the top half beat the bottom half by a factor of more than two. (To learn more visit: About Zacks Sector Rank). In addition, our proprietary Heat Map shows that the sector’s rank has remained in the bottom half of the rank list in the past eight weeks.
Seeing the financial performance, the sector’s earnings growth (on a year-over-year basis) over the first three quarters of 2018 was weak as well — having decelerated from 36.2% in the first quarter to 33.8% in the second and 20.2% in the third. We now expect the sector’s earnings growth to be roughly 14% in the fourth quarter of 2018. Likewise, revenue growth declined from 16.1% in the first quarter to 7.3% in the third quarter. It is predicted to be 5.3% in the fourth quarter.
Broader market issues, particularly straining international trade relations due to protectionism policies (imposition of import tariffs) of the United States, weighed on the sector,. Further, inflationary pressure, rising freight charges and difficulties in finding skilled labor added to the woes, largely eroding margins. Geopolitical tension, as well as unfavorable movements in foreign currencies, has adversely impacted the sector’s prospects as well.
5 Suitable Choices in a Struggling Industrial Sector
Despite all the setbacks, industrial stocks benefited from lower tax rates due to the implementation of the U.S. Tax Cuts and Jobs Act in December last year. Moreover, the strengthening housing market, infrastructural developments and growing manufacturing activities have been favoring some industrial companies. Innovation to tap customer demand kept the momentum alive for some stocks.
Using Zacks Stock Screener, we have zeroed in on five lucrative investment options from the Industrial Products sector that stand tall despite near-term uncertainties.
Cintas Corporation (CTAS - Free Report) : This Cincinnati, OH-based industrial uniform and other products supplier currently carries a Zacks Rank #2 (Buy). Its market capitalization is roughly $16.7 billion.
Year to date, the stock has gained roughly 2.1%. Its Zacks Consensus Estimate for earnings has increased 2.1% for fiscal 2019 (ending May 2019) and 1.6% for fiscal 2020 (ending May 2020) in the past three months.
W.W. Grainger, Inc. (GWW - Free Report) : This facilities maintenance products supplier is based in Lake Forest, IL, and has a market capitalization of roughly $15.5 billion.
The stock, currently carrying a Zacks Rank #2, has increased 16.5% year to date. Further, earnings estimates have risen 1.6% for 2018 and 0.3% for 2019 in the past three months.
Zebra Technologies Corporation (ZBRA - Free Report) : The company, based in Lincolnshire, IL, engages in making tracking technology and related solutions. Its market capitalization is currently $8.1 billion.
The stock currently carries a Zacks Rank #2 and has returned 45.5% year to date. In the past three months, the Zacks Consensus Estimate has increased 4.5% for 2018 and 3.7% for 2019.
Brady Corporation (BRC - Free Report) : This safety and security services provider is based in Milwaukee, WI. It currently has $2.2-billion market capitalization.
The stock currently carries a Zacks Rank #2 and has returned 8.8% year to date. The Zacks Consensus Estimate has been raised 3.6% for fiscal 2019 (ending July 2019) and 4.2% for fiscal 2020 (ending July 2020) in the past three months.
Enersys (ENS - Free Report) : The company provides energy solutions for use in industrial end-markets. It is based in Reading, PA. It currently has a market capitalization of approximately $3.1 billion.
This Zacks Rank #2 stock has rallied 3.1%. Earnings estimates have increased 1.6% for fiscal 2019 (ending March 2019) and 4.9% for fiscal 2020 (ending March 2020) in the past three months.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
Image: Bigstock
5 Industrial Products Stocks That Survived 2018 Sector Crash
Year 2018 so far has been difficult for companies engaged in providing industrial equipment and services; metal fabrication; machinery; products made from textiles, rubber or plastics; and pollution control solutions. The Zacks Industrial Products sector — which includes such industrial stocks — seems to have lost its sheen in the year.
Troubling Year for Industrial Products
Collectively, the average share price of the constituent companies of the Industrial Products sector has declined 22.8% year to date against 25% growth recorded in 2017. Also, the sector’s performance was worse than S&P 500’s decline of 6.2%.
The sector currently lies in the bottom 38% of the Zacks sector list — holding the 10th position out of total 16. Over the last 10 years, using a one-week rebalance, the top half beat the bottom half by a factor of more than two. (To learn more visit: About Zacks Sector Rank). In addition, our proprietary Heat Map shows that the sector’s rank has remained in the bottom half of the rank list in the past eight weeks.
Seeing the financial performance, the sector’s earnings growth (on a year-over-year basis) over the first three quarters of 2018 was weak as well — having decelerated from 36.2% in the first quarter to 33.8% in the second and 20.2% in the third. We now expect the sector’s earnings growth to be roughly 14% in the fourth quarter of 2018. Likewise, revenue growth declined from 16.1% in the first quarter to 7.3% in the third quarter. It is predicted to be 5.3% in the fourth quarter.
Broader market issues, particularly straining international trade relations due to protectionism policies (imposition of import tariffs) of the United States, weighed on the sector,. Further, inflationary pressure, rising freight charges and difficulties in finding skilled labor added to the woes, largely eroding margins. Geopolitical tension, as well as unfavorable movements in foreign currencies, has adversely impacted the sector’s prospects as well.
5 Suitable Choices in a Struggling Industrial Sector
Despite all the setbacks, industrial stocks benefited from lower tax rates due to the implementation of the U.S. Tax Cuts and Jobs Act in December last year. Moreover, the strengthening housing market, infrastructural developments and growing manufacturing activities have been favoring some industrial companies. Innovation to tap customer demand kept the momentum alive for some stocks.
Using Zacks Stock Screener, we have zeroed in on five lucrative investment options from the Industrial Products sector that stand tall despite near-term uncertainties.
Cintas Corporation (CTAS - Free Report) : This Cincinnati, OH-based industrial uniform and other products supplier currently carries a Zacks Rank #2 (Buy). Its market capitalization is roughly $16.7 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Year to date, the stock has gained roughly 2.1%. Its Zacks Consensus Estimate for earnings has increased 2.1% for fiscal 2019 (ending May 2019) and 1.6% for fiscal 2020 (ending May 2020) in the past three months.
W.W. Grainger, Inc. (GWW - Free Report) : This facilities maintenance products supplier is based in Lake Forest, IL, and has a market capitalization of roughly $15.5 billion.
The stock, currently carrying a Zacks Rank #2, has increased 16.5% year to date. Further, earnings estimates have risen 1.6% for 2018 and 0.3% for 2019 in the past three months.
Zebra Technologies Corporation (ZBRA - Free Report) : The company, based in Lincolnshire, IL, engages in making tracking technology and related solutions. Its market capitalization is currently $8.1 billion.
The stock currently carries a Zacks Rank #2 and has returned 45.5% year to date. In the past three months, the Zacks Consensus Estimate has increased 4.5% for 2018 and 3.7% for 2019.
Brady Corporation (BRC - Free Report) : This safety and security services provider is based in Milwaukee, WI. It currently has $2.2-billion market capitalization.
The stock currently carries a Zacks Rank #2 and has returned 8.8% year to date. The Zacks Consensus Estimate has been raised 3.6% for fiscal 2019 (ending July 2019) and 4.2% for fiscal 2020 (ending July 2020) in the past three months.
Enersys (ENS - Free Report) : The company provides energy solutions for use in industrial end-markets. It is based in Reading, PA. It currently has a market capitalization of approximately $3.1 billion.
This Zacks Rank #2 stock has rallied 3.1%. Earnings estimates have increased 1.6% for fiscal 2019 (ending March 2019) and 4.9% for fiscal 2020 (ending March 2020) in the past three months.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>