We are positive on Allegheny Technologies Incorporated’s (ATI - Free Report) prospects and believe that the time is right for you to buy the stock as it looks promising and is poised to continue the momentum.
Let’s delve deeper into the factors that make this Zacks Rank #2 (Buy) stock an attractive investment option.
An Outperformer: Allegheny has outperformed the industry it belongs to over a year. The company’s shares have rallied 47.1% compared with roughly 36.7% growth recorded by the industry.
Strong Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for Allegheny is currently pegged at $1.38, reflecting an expected year-over-year growth of 187.5%. Moreover, earnings are expected to register a 47.5% growth in 2019.
Impressive Surprise History: Allegheny reported net earnings of $58 million or 42 cents per share in first-quarter 2018, compared with $17.5 million or 16 cents recorded a year-ago. Adjusted earnings came in at 32 cents per share, surpassing the Zacks Consensus Estimate of 24 cents.
The company has also topped the Zacks Consensus Estimate for earnings in three of the trailing four quarters with an average positive surprise of 38.7%.
Upbeat Prospects: Allegheny expects continued operating margin improvement and revenue growth in its High Performance Materials & Components unit in 2018 from improved asset utilization and aerospace market demand growth. It also expects Flat-Rolled Products (FRP) unit to capitalize on the operational improvements and A&T Stainless joint venture and growth in differentiated products.
Allegheny also continues to improve its cost structure with its gross cost reduction initiative. In 2018, Allegheny expects to generate free cash flow of at least $150 million from ongoing operational improvements and disciplined spending.
Moreover, the company’s joint venture (JV) with Tsingshan Group Company will offer cost competitive stainless sheet products made for the North American market through a unique combination of Allegheny’s innovative, low-cost Hot-Rolling and Processing Facility (HRPF) and Tsingshan’s unparalleled Indonesian refining, mining and castings assets, and the JV’s unique Direct Roll Anneal and Pickle facility in Midland, PA.
The JV supports Allegheny’s considerable investment in the U.S. manufacturing operations, especially its HRPF facility, which will provide value addition to the processing services for the JV’s finished products.
Other Stocks to Consider
Some other top-ranked stocks worth considering in the basic materials space are The Chemours Company (CC - Free Report) , FMC Corporation (FMC - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained 24.3% in a year.
FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 20.8% in a year.
Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 62.9% in a year.
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