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Here's Why You Should Invest in Lindsay (LNN) Stock Now

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Lindsay Corporation (LNN - Free Report) is well-poised to gain on improving farm dynamics in the United States owing to rising farm income and improving commodity prices. The company’s infrastructure business is also performing well, courtesy of strong demand for Road Zipper projects and transportation safety products. Strategic acquisitions and development of innovative technology products are also acting as key catalysts.

Lindsay currently carries a Zacks Rank #2 (Buy). It has 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) or 2, offer the best investment opportunities for investors.

You can see the complete list of today's Zacks #1 Rank stocks here.

Let’s delve into the factors that make the stock an alluring investment option at the moment.

Price Performance: Lindsay’s shares have gained 31.9% over the past three months, compared with the industry’s growth of 26.8%.


 

Earnings Surprise History: Lindsay has a trailing four-quarter earnings surprise of 3.34%, on average.

Upward Estimate Revisions: The Zacks Consensus Estimate for the company’s earnings estimates 2021 and 2022 have moved north by 25% and 30%, respectively, over the past 90 days.

Superior Return on Assets: Lindsay currently has a Return on Assets (ROA) of 6.4%, higher than the industry’s 3.6%. An above-average ROA denotes that the company is generating earnings by effectively managing its assets.

Growth Drivers in Place

Net farm income in the United States is anticipated to increase primarily due to higher Federal government direct farm program payments through the expansion of the Coronavirus Food Assistance Program ("CFAP”) and improving agricultural commodity prices. After declining significantly earlier in 2020 amid the pandemic, commodity prices have recovered aided by an improving demand environment and lower crop production due to adverse weather conditions in certain parts of the United States. Pickup in farm income will persuade farmers to resume spending on agricultural equipment, which in turn will drive Lindsay’s top line.

The company’s infrastructure business is poised to grow on strong momentum in Road Zipper Systems. Given its significant advantages including reducing congestion and lowering carbon emission, the Road Zipper System is a highly differentiated product that positively delivers and is gaining popularity globally. Management’s “shift left” strategy, focused on customer engagement at the planning and design stage, has accelerated adoption of the Road Zipper System. Further, demand for the company’s transportation safety products continues to gain traction on the back of population growth and need for improved road safety.

Lindsay anticipates its irrigation operating margin performance in the United States to benefit from strength and growth of innovative technology products. In April 2020, the company completed the acquisition of Net Irrigate, LLC, which will expand the number of irrigated acres managed under the company’s FieldNET platform. This buyout strengthens its market position in remote monitoring capabilities. Shifting to mechanized irrigation delivers significant advantages to farmers — water and energy savings, improved yield, reduced labor and cost effectiveness. Hence, Lindsay is well-poised for growth in the years to come.

Also, the Fixing America's Surface Transportation (FAST) Act has been extended for one year. The extension includes $13.6 billion to maintain the Highway Trust Fund's solvency at current funding levels ($47.1 billion for highway programs and $12.3 billion for transit programs) through fiscal year 2021. This extension will provide much-needed funding certainty to state and local governments navigating significant revenue shortfalls due to the COVID-19 pandemic.

Other Stocks to Consider

Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Avery Dennison Corporation (AVY - Free Report) and The Timken Company (TKR - Free Report) . While AGCO flaunts a Zacks Rank #1, Avery Dennison and Timken carry a Zacks Rank #2, at present.

AGCO has an estimated earnings growth rate of 20.7% for the ongoing year. Shares of the company have appreciated 44% in the past three months.

Avery Dennison has a projected earnings growth rate of 6.4% for the current year. Over the past three months, the company’s shares have gained 22%.

Timken has an expected earnings growth rate of 15% for 2021. The stock has rallied 11% over the past three months.

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