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Here's Why it is Worth Investing in Howmet (HWM) Stock Now

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Howmet Aerospace Inc. (HWM - Free Report) currently boasts robust prospects on strength across its businesses, solid product portfolio, healthy liquidity position and a sound capital-deployment strategy.

Zacks Investment Research
Image Source: Zacks Investment Research

The Zacks Rank #2 (Buy) company has a market capitalization of $14.8 billion. In the past six months, it has gained 14.6% compared with the industry’s growth of 4.6%.

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

Strength in End Markets: Howmet’s presence across diversified end markets, including aerospace, commercial transportation, industrial gas turbine, general industrial and oil & gas, helps it offset weakness in one or multiple markets with strength in others. In fourth-quarter 2021, the company’s revenues from commercial transportation and commercial aerospace increased 20% and 13% year over year, respectively. For 2022, it anticipates revenues of $5.56-$5.72 billion, suggesting 12.8% growth year over year. For the first quarter of 2022, revenues are expected to be $1.28-$1.32 billion.

Healthy Liquidity Position: The company’s strong liquidity position adds to its strength. Exiting 2021, it had an available cash balance of $720 million and an undrawn revolving credit facility of $1 billion. Also, in 2021, its adjusted free cash flow was $517 million. For 2022, HWM anticipates an adjusted free cash flow of $575-$675 million.

Rewards to Shareholders: Howmet remains committed to rewarding shareholders through dividend payouts and share buybacks. In 2021, the company paid dividends worth $19 million and repurchased shares worth $430 million. Also, it executed the repurchase of 3 million shares for $100 million in January 2022.

Initiatives:  The company is poised to gain from its solid product offerings, pricing actions and efforts to innovate products and reduce operating costs. For 2022, it anticipates earnings (excluding special items) of $1.31-$1.43, higher than $1.01 recorded in 2021. Also, first-quarter earnings are expected to be 28-30 cents per share.

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In the past 60 days, NDSN’s earnings estimates have increased 1.1% for fiscal 2022 (ending October 2022). Nordson’s shares have declined 11.9% in the past six months.

Donaldson Company, Inc. (DCI - Free Report) presently carries a Zacks Rank #2. DCI delivered a trailing four-quarter earnings surprise of 4.2%, on average.

Earnings estimates for DCI have increased 0.7% for fiscal 2022 (ending July 2022) in the past 60 days. Its shares have lost 16.3 % in the past six months.

Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. Its earnings surprise in the last four quarters was 14.2%, on average.

In the past 60 days, earnings estimates for FERG have increased 7% for fiscal 2022 (ending July 2022). The stock has declined 18.5% in the past six months.

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