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Here's Why it is Worth Investing in Applied Industrial (AIT)

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Applied Industrial Technologies, Inc. (AIT - Free Report) currently boasts strong growth prospects on solid demand for its products, acquired assets, operational excellence initiatives and a sound capital-deployment strategy.

Notably, this Zacks Rank #2 (Buy) company has a market capitalization of $4 billion. In the past three months, it has gained 23% compared with the industry’s growth of 14.1%.

Let’s delve into the factors that make investing in the company a smart choice at the moment.

Solid Demand for Products: Applied Industrial has been benefiting from solid demand for its engineered solutions and cross-selling actions, as well as a healthy balance sheet. In addition, its focus on improving the product line, value-added services, initiatives to drive operational excellence and cost-saving initiatives bodes well. For the fourth quarter of fiscal 2021 (ending June 2021), the company predicts organic sales growth of 12-13% on a year-over-year basis.

Acquisition Benefits: The company believes in adding complementary assets to its portfolio. Some of the notable buyouts made by the company include MilRoc Distribution and Woodward Steel in March 2019, Olympus Controls in August 2019 and Advanced Control Solutions in October 2020. In addition, the Gibson acquisition (January 2021) will allow it to strengthen and expand its range of automation solutions across the U.S. Northeast and Mid-Atlantic markets. Notably, in third-quarter fiscal 2021 (ended March 2021), buyouts had a positive impact of 1.8% on the company’s sales.

Rewards to Shareholders: It remains committed to rewarding shareholders through dividend payouts, apart from using its funds for acquiring lucrative businesses. In the first nine months of fiscal 2021, it paid out dividends worth $37.8 million, reflecting an increase of 3.8% year over year. Also, in January 2021, it announced a 3.1% hike in its quarterly dividend rate.

Estimate Revisions: In the past 30 days, the Zacks Consensus Estimate for the company’s 2021 earnings has trended up from $3.92 to $4.39 on one upward estimate revision against none downward. In addition, the consensus estimate for its 2022 earnings has increased from $4.26 to $4.43 on one upward estimate revision versus none downward.

Other Stocks to Consider

Some other top-ranked stocks from the same space are Barnes Group, Inc. (B - Free Report) , IDEX Corporation (IEX - Free Report) and Graco Inc. (GGG - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Barnes delivered an earnings surprise of 19.45%, on average, in the trailing four quarters.

IDEX delivered an earnings surprise of 9.12%, on average, in the trailing four quarters.

Graco delivered an earnings surprise of 28.28%, on average, in the trailing four quarters.

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