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Here's Why Hold Strategy is Apt for ITT Stock Right Now

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ITT Inc. (ITT - Free Report) is poised to gain from strength in the end markets like chemical and industrial pumps, commercial aerospace and defense, rail and general industrial despite supply-chain constraints, high cost of sales (due to raw material cost inflation) and increasing operating expenses. The company’s organic orders grew 7% year over year in the third quarter, driven by strong demand for pumps, connectors, aerospace and defense components. Also, a robust backlog in its businesses, supported by the recovery in the energy end market, is expected to boost its performance in the long run.

ITT has been investing in product innovation across its connectors, friction technologies and pump businesses for some time now. ITT also launched the third generation of its i-ALERT Condition Monitoring Solution in May 2022. Also, its connector business unveiled its ruggedized, modular circular series Veam MOVE-MOD in November 2021. The company intends to become more competent on the back of innovation investments in the quarters ahead.

ITT acquired Clippard Instrument Laboratories’ product lines in August 2022. The buyout expanded its Compact Automation product offering in the robotics, packaging and automation end markets. The acquisition of CRP Technology and CRP USA (jointly CRP) in June 2022 helped ITT acquire additive manufacturing technology capabilities and strengthened its position in the material science space. Also, the buyout of Habonim (April 2022) boosted ITT’s offerings in the cryogenic and hydrogen ball valve space apart from expanding into new end markets. It predicts the buyout to be accretive to its EBITDA margin.

In the first nine months of 2022, ITT paid out dividends of $66.1 million and bought back shares worth $245.6 million. Also, the quarterly dividend rate was hiked 20% in February 2022.

In light of the above-mentioned positives, we believe, investors should hold on to the ITT stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past six months, the stock has rallied 24% compared with the industry’s 6.1% increase.

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In the past 60 days, MRC Global’s earnings estimates have increased 16.2% for 2022. The stock has gained 24.1% in the past six months.

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