Swift technological advances and innovation in production processes will likely boost the industrial sector. Therefore, I think quality industrial stocks Amada Co., Ltd. (AMDLY), Columbus McKinnon Corporation (CMCO), and Powell Industries, Inc. (POWL) might be ideal buys today. These stocks are rated an A (Strong Buy) in our proprietary rating system.
Rapid technological advances are expected to drive innovation in industrial machinery manufacturing, thus driving growth in the industry. Technologies such as 3D printing, artificial intelligence, and big data analytics are being used in manufacturing, thus resulting in higher productivity, lower operating costs, and higher margins.
The industrial machinery market is expected to grow to $708.30 billion in 2027 at a CAGR of 6.7%.
In addition, the industrial machinery market has been growing steadily over the years, driven by the demand for automation and the modernization of production processes. The market growth is also fueled by the evolving manufacturing sector, especially in developing countries.
Moreover, the Industrial Production Index came in at 103 in the United States in April 2023, and a value of over 100 shows positive production performance.
Take a look at the stocks mentioned above:
Amada Co., Ltd. (AMDLY)
Headquartered in Isehara, Japan, AMDLY manufactures, sells, leases, repairs, maintains, checks, and inspects metalworking machinery, software, and peripheral equipment worldwide.
On May 9, 2023, AMDLY launched sales of LIVLOTS, a new DX solution to support manufacturing sites.
LIVLOTS accelerates the digitization of manufacturing workplaces by seamlessly connecting customer offices, programming rooms, processing machines, and the manufacturing workplace, including gaining a more accurate understanding of the progress and work hours for each product in the factory overall.
AMDLY’s forward EV/Sales of 0.98x is 42.2% lower than the industry average of 1.70x. Its forward P/S multiple of 1.29 is 1.9% lower than the industry average 1.32.
During the fiscal year that ended March 31, 2023, revenue increased 17% year-over-year to YEN365.69 billion ($2.62 billion). Its profit rose 23% year-over-year to YEN43 billion ($246.37 million). Also, its EPS increased 23% year-over-year to YEN 98.
AMDLY’s revenue is expected to increase 11.4% year-over-year to $610.55 million for the fiscal first quarter ending June 2023. Also, it has surpassed revenue estimates in three of the trailing four quarters, which is impressive.
Shares of AMDLY have gained 14.8% over the past nine months to close the last trading session at $34.38.
AMDLY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum and a B in Stability, Value, and Quality. It is ranked #4 out of 80 in the A-rated Industrial - Machinery industry.
Beyond what is stated above, we’ve also rated AMDLY for Growth and Sentiment. Get all AMDLY ratings here.
Columbus McKinnon Corporation (CMCO)
CMCO designs, manufactures, and markets intelligent motion solutions for moving, lifting, positioning, and securing materials worldwide.
On May 31, 2023, CMCO announced that it had closed the previously announced acquisition of montratec GmbH, a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes.
The company has acquired montratec in an all-cash transaction for approximately $110 million at current exchange rates. The acquisition includes an earnout in an amount expected not to exceed $14 million based on future EBITDA performance of montratec.
CMCO pays $0.28 annually as dividends. This translates to a yield of 0.68% at the current price, compared to the 4-year average dividend yield of 0.67%. Its dividend payments have grown at a CAGR of 5.3% and 10.5% over the past three and five years, respectively.
CMCO’s forward EV/Sales of 1.55x is 8.6% lower than the industry average of 1.70x. Its forward P/S multiple of 1.18 is 10.7% lower than the industry average of 1.32.
CMCO’s net sales increased marginally year-over-year to $253.84 million in the fiscal fourth quarter that ended March 31, 2023. Its adjusted gross profit increased 2.8% year-over-year to $91.22 million. Also, its adjusted EPS increased 1.3% year-over-year to $0.80.
Street expects CMCO’s revenue to increase 7.5% year-over-year to $236.88 million for the fiscal first quarter ending June 2023. The company’s EPS for the same quarter is expected to be $0.65. Also, it has surpassed EPS estimates in each of the trailing four quarters.
The stock has gained 39.6% over the past nine months to close the last trading session at $41.32.
CMCO’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
CMCO has an A grade for Momentum and a B in Sentiment and Value. It is ranked #6 in the same industry.
Click here to see the additional POWR Ratings for CMCO (Growth, Stability, and Quality).
Powell Industries, Inc. (POWL)
POWL designs, develops, manufactures, sells, and services custom-engineered equipment and systems for the distribution, control, and monitoring of electrical energy.
On May 2, POWL declared a quarterly dividend of $0.26, payable on June 14, 2023. POWL pays $1.05 annually as dividends. This translates to a yield of 1.70% at the current price, compared to the 4-year average dividend yield of 3.56%.
POWL’s forward EV/Sales of 0.88x is 48.3% lower than the industry average of 1.70x. Its forward P/S multiple of 1.13 is 14.6% lower than the industry average of 1.32.
POWL’s revenues increased 34.7% year-over-year to $177.44 million in the fiscal second quarter, which ended March 31, 2023. Its net income came in at $8.47 million, compared to a loss of $1.22 million in the previous-year quarter. Also, its earnings per share came in at $0.70, compared to negative $0.10 in the previous-year quarter.
Analysts expect POWL’s revenue to increase 26% year-over-year to $170.71 million for the fiscal third quarter ending June 2023. The company’s EPS for the same quarter is expected to grow 400% year-over-year to $0.65. Also, it has surpassed revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 156.9% over the past nine months to close the last trading session at $60.12.
POWL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
POWL also has a B grade for Value, Quality, and Sentiment. It is ranked #5 in the same industry.
To access additional ratings for POWL’s Growth, Momentum, and Stability, click here.
What To Do Next?
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AMDLY shares were trading at $34.38 per share on Wednesday morning, up $3.75 (+12.24%). Year-to-date, AMDLY has gained 12.24%, versus a 15.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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