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Forget Honeywell, Buy These 4 Diversified Operations' Stocks

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Wall Street’s bigger names are rife with apprehension over the doldrums across the equity universe. Headwinds including a full-blown trade war between the United States and China and the ongoing truck industry issues are weighing on the margins of multi-sector behemoths like Honeywell International Inc. (HON - Free Report) . Nevertheless, a few across the space are likely to outshine in the New Year on the back of the tax overhaul, robust domestic demand and bold restructuring initiatives. Against this backdrop, we have handpicked four diversified operations’ stocks that will likely reap rewards for your portfolio.

Inside Story

Quite a few stocks within the diversified operations industry are hit by severe supply-side challenges. Profitability of these companies are at stake due to material cost inflation (on account of tariffs levied on U.S. imports), rising freight charges (due to shortage of truck drivers and soaring truck fuel surcharges), scarcity of skilled workforce and rising interest expenses. Additionally, a stronger U.S. dollar is presently hurting the overseas revenues and margins of these mega stocks.

Honeywell too is suffering on the same issues. Moreover, low air purifying solutions’ demand in China as well as anticipated weakness in building solutions and energy conversion businesses will be a major cause of concern for the company in 2019. The Zacks Consensus Estimate for the company’s 2019 earnings has moved nearly 8.6% south to $7.95 per share, in the past 60 days.

However, we opine that investors should not completely shy away from the diversified operations stocks in favor of retaining core-business focused companies.

Thrust on infrastructure and stimulus provided by the Republic-led government have supported the domestic business prospects of these diversified operations companies. Additionally, these behemoths have been largely buoyed by the corporate tax cuts implemented in December 2017. We also notice that some of these companies are currently undertaking bold restructuring moves, divesting non-core businesses and making meaningful acquisitions to sail through jittery market conditions.

4 Best Choices for 2019

Given such positives, we have zeroed in on four diversified operations stocks that are likely to outperform and add sparkle to your portfolio.

These picks currently carry a favorable Zacks Rank #1 (Strong Buy) or 2 and flaunt a VGM Score of A or B. Also, the stocks have witnessed positive earnings estimate revisions for the past 60 days.

Barloworld Limited (BRRAY - Free Report) distributes products that offer fleet management, rental and logistics solutions to the market.

The Zacks Consensus Estimate for earnings has moved up 4.7% to 89 cents per share for fiscal year 2019 (ending September 2019). Notably, the projected year-over-year earnings growth rate for the company is currently pegged at 16.9% for fiscal year 2019. The company currently sports a Zacks Rank #1 and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crane Company (CR - Free Report) produces and sells state-of-the-art engineered industrial products across the globe.

The company carries a Zacks Rank #2 and has a VGM Score of A. The Zacks Consensus Estimate for earnings has moved up 0.2% to $6.44 per share for 2019. Notably, the projected year-over-year earnings growth rate for the company is currently pegged at 9.3% for 2019.

Federal Signal Corporation (FSS - Free Report) manufactures, designs and supplies integrated solutions and products for governmental, commercial and industrial customers.

The company has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for earnings has moved up 1.3% to $1.52 per share for 2019. Notably, the projected year-over-year earnings growth rate for the company is currently pegged at 11.8% for 2019.

ITT Inc. (ITT - Free Report) produces and sells customized technology solutions and engineered critical components in the market.

The company carries a Zacks Rank #2 and has a VGM Score of B. The Zacks Consensus Estimate for earnings has moved up 0.6% to $3.59 per share for 2019. Notably, the projected year-over-year earnings growth rate for the company is currently pegged at 14% for 2019.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>

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