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Here's Why Applied Industrial (AIT) is an Attractive Pick Now

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Applied Industrial Technologies, Inc. (AIT - Free Report) is poised to gain from strength in the Service Center Based Distribution segment, acquired assets and a sound capital-deployment strategy.

Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.

Business Strength: Applied Industrial is poised for growth on the back of strength across the food and beverage, lumber and wood, mining, pulp and paper, energy, utilities and refining end markets. The Service Center Based Distribution segment is benefiting from a strong market position, sales initiatives and growth across national customer accounts.

An increase in demand for technical MRO support and fluid power MRO services across the U.S. manufacturing sector, driven by growing digitization and increasing investment in maintenance operations, is supporting the segment’s revenues. The Service Center Based Distribution segment’s revenues increased 3.6% in the third quarter (ended March 2024). Driven by strength across its business, the company predicts sales to increase in the range of 1-2.5% year over year in fiscal 2024 (ending June 2024).

Expansion Initiatives: AIT has added multiple assets to its portfolio over time. In the fiscal third quarter, buyouts had a positive impact of 1.2% on the company's sales. Acquisitions boosted sales by 1.5% and 0.4% for the Service Center-Based Distribution and Engineered Solutions segments, respectively.

In May 2024, Applied Industrial acquired Grupo Kopar (Kopar), thus enhancing its automation position in North America. The acquisitions of Bearing Distributors and Cangro (September 2023) enhanced the company’s footprint and strategic growth initiatives across the Southeast U.S. and upper Northeast regions. The Advanced Motion Systems Inc. (April 2023) buyout expanded its footprint in the upper Northeast region of the United States while helping to bolster relationships with leading suppliers.

Rewards to Shareholders: Applied Industrial is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first nine months of fiscal 2024, it rewarded shareholders with dividends of $41.5 million, up 4.3% year over year. The company hiked its quarterly dividend rate by 5.7% in January. In fiscal 2023, it paid out dividends worth $53.4 million, up 3.2% on a year-over-year basis.

Northward Estimate Revision: The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has been revised upward by 2.1% in the past 60 days.

Price Performance: Shares of Applied Industrial have gained 53% in the past year, outperforming the industry’s 29.3% increase.

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Other Stocks to Consider

Some other top-ranked companies from the Industrial Products sector are discussed below.

Greif, Inc. (GEF - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 150.6%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for GEF’s fiscal 2024 earnings has improved 5.3% in the past 60 days. The stock has risen 6.2% in the past year.

Belden Inc. (BDC - Free Report) presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 14.7%, on average.

The consensus estimate for BDC’s 2024 earnings has increased 8.3% in the past 60 days. Shares of Belden have risen 9.7% in the past year.

Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.

The Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.1% in the past 60 days. Its shares have risen 91.9% in the past year.

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