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Reasons to Retain Graco (GGG) Stock in Your Portfolio Now

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Graco Inc. (GGG - Free Report) has been benefiting from strength in the Industrial and Process segments despite weakness in the Contractor segment and escalating costs.

Let us discuss the reasons why investors should retain the stock for the time being.

Growth Catalysts

Business Strength: Improved project activity in the Asia Pacific region is supporting GGG’s Industrial segment. The Process segment is gaining from the solid momentum in most business units and across all reportable regions, led by double-digit growth in vehicle services and semiconductors. For 2023, the company predicts organic sales growth (on a constant-currency basis) in low-single digits. Also, strong price realization, along with favorable product and channel mix, is aiding the company’s margin performance. Graco’s gross margin increased 490 basis points in the third quarter of 2023.

Investments in Product Innovation: Investments in capacity expansion and product innovation are aiding Graco’s performance. In 2023, the company anticipates capital expenditures to be approximately $200 million, including $130 million for facility expansion projects at its Minnesota, South Dakota, Switzerland and Romania facilities. As for innovation, GGG introduced a hot melt adhesive dispense system, the InvisiPac HM10 and electric-powered airless gun and Ultra QuickShotearlier in 2023.

Rewards to Shareholders: Graco continues to increase shareholders’ value through dividend payments & share repurchases. In the first nine months of 2023, the company paid out dividends worth $118.7 million to its shareholders, up 11.1% year over year. It repurchased common stocks worth $27.1 million in the same period.

In light of the above-mentioned positives, we believe, investors should retain GGG stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company have gained 20.4% in a year compared with the industry‘s 14.2% increase.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked companies from the same industry are discussed below:

Graham Corporation (GHM - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 264.8%. In the past 60 days, the Zacks Consensus Estimate for Graham’s 2023 earnings has increased 106.7%. The stock has risen 109% in the past year.

Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 13.9%.

The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.8% in the past 60 days. Shares of Applied Industrial have rallied 35.3% in the past year.

Crane Company (CR - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 29.8%.

In the past 60 days, the Zacks Consensus Estimate for Crane’s 2023 earnings has remained steady. The stock has risen 44.9% in the past year.

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