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Here' Why Hold Strategy is Apt for TriMas (TRS) Stock

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TriMas Corporation (TRS - Free Report) has been benefiting from increasing demand for personal hygiene products, home and industrial cleaning, food and beverage, and pharmaceuticals amid the coronavirus pandemic in its Packaging segment. Acquisitions to augment its product offerings and expand geographic presence has also been contributing to growth. The recent recovery in the manufacturing sector also bodes well for the company. Further, its TriMas Business Model and efforts to cut down costs have been aiding aid margins.

TriMas’ shares have gained 37.9% over the past three months, compared with the industry and the S&P 500’s rally of 36.9% and 10.0%, respectively.



The company currently has a Zacks Rank #3 (Hold) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) 2 (Buy) or 3, offer the best investment opportunities.

Factors Favoring the Stock

Earnings Surprise History: The company has a trailing four-quarter earnings surprise of 8.5%, on average.

Positive Estimate Revision Activity: The Zacks Consensus Estimate for the company’s earnings estimates 2021 and 2022 have moved north by 15.4% and 19.9%, respectively, over the past 90 days.

Valuation is Cheap: TriMas is currently trading at a trailing 12-month EV/EBITDA multiple of 6.59, while the industry’s trailing 12-month EV/EBITDA is pegged at 13.44. Consequently, the company is undervalued compared with its industry peers.

Growth Drivers

Given that TriMas serves a diverse set of end markets, it will help the company to tide over the pandemic-induced crisis. The company’s Packaging group manufactures dispensers and closures, which are used in applications that help fight the spread of germs, improve personal hygiene, and for home and industrial cleaning, and food and beverage, pharmaceutical applications. Demand for these products remain strong amid the ongoing pandemic and is expected to drive the top line until the situation stabilizes. Further, the recent pickup in manufacturing activity will reflect on TriMas’ results.

The conpany acquired Plastic Srl and Taplast in 2019, which augmented its product offering and expanded geographic presence while accelerating growth of packaging platform. In February 2020, TriMas acquired RSA Engineered Products, which expanded its aerospace presence into environmental control system applications, the defense and business jet markets, and aerospace aftermarket. The company has also acquired the Rapak brand, including certain bag-in-box product lines and assets, from Liqui-Box. The Rapak brand name, and bag-in-box applications and products will improve TriMas’ packaging portfolio. The company recently completed the buyout of Affaba & Ferrari, which will aid the company to strengthen its existing food and beverage and industrial product lines, while offering new product applications for consumer packaged goods and top-grade industrial customers.

TriMas will continue to focus on leveraging the TriMas Business Model, which was implemented in late 2016 to improve management and performance of its businesses. Its innovative solutions through product, process or service, and extensive resources will help enhance business performance. The company also has a strong pipeline of both product and process innovation that will sustain long-term growth. It has been taking steps to lower costs, which will aid margins.

Zacks Rank & Stocks to Consider

TriMas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Deere & Company (DE - Free Report) and Avery Dennison Corporation (AVY - Free Report) . While AGCO and Deere sport a Zacks Rank #1 (Strong Buy), Avery Dennison carries a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an estimated long term earnings growth rate of 13%. The company’s shares have gained 43% in the past three months.

Deere has an estimated long-term earnings growth earnings growth rate of 16%. The company’s shares have appreciated 26% over the past three months.

Avery Dennison has an estimated long term earnings growth 6.7%. Over the past three months, the stock has gained 24%.

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