The industrial sector is experiencing significant growth potential thanks to increased demand for industrial machinery and services across diverse industries. This trend is further supported by the adoption of advanced technologies and amplified governmental policies and investments.
So, quality industrial stocks General Electric Company (GE), AptarGroup, Inc. (ATR), and Limbach Holdings, Inc. (LMB) could be ideal investments for major gains in 2024.
The industrial sector, marked by its transition from traditional manufacturing to a focus on sustainable solutions, holds immense global importance.
Also, the interconnected global economy prompts businesses to seek specialized industrial services to navigate international regulations, logistics, and supply chain complexities. Additionally, the expansion of industrial activities and the continuous growth of manufacturing sectors contribute to the demand for industrial services.
The global industrial services market is expected to reach $51.98 billion in 2032, expanding at a CAGR of 5.7%.
Moreover, the industrial manufacturing sector has undergone a substantial transformation, becoming a technologically advanced sector that plays a pivotal role in driving global economies. Spurred by the Fourth Industrial Revolution, this evolution has redefined the manufacturing landscape.
Besides, investments in digital technologies such as AI, machine learning, and robotics have improved the industry's production capabilities and workforce structures.
Additionally, the expanding manufacturing sector creates a domino effect, elevating the importance of industrial packaging in safeguarding products during storage, transit, and handling. Manufacturers seek packaging solutions that enhance product protection, overall efficiency, and cost-effectiveness in the evolving market, leading to continuous innovation in industrial packaging materials and technologies.
The global industrial packaging market is predicted to grow at a CAGR of 3.8%, reaching $87.20 billion by the end of 2030.
Considering these conducive trends, let's take a look at the fundamentals of the three best industrial stocks.
General Electric Company (GE)
GE operates as a high-tech industrial company in Europe, China, Asia, the Americas, the Middle East, and Africa. It offers gas and steam turbines, full balance of plant, upgrade, and service solutions, as well as data-leveraging software for power generation, industrial, government, and other customers.
On December 13, 2023, Prolec GE, a global energy infrastructure leader and subsidiary of the joint venture between GE and Xignux, announced that it was investing $85 million to expand its manufacturing capacity for single-phase pad-mount transformers in response to surging demand in North America.
The company will set up a new facility in Monterrey, Mexico, capable of doubling the annual production of transformers, incorporating advanced manufacturing technology for enhanced productivity and ergonomics. The move reflects the company's dedication to being a strategic partner in the pursuit of a sustainable energy future.
With a four-year average dividend yield of 0.38%, the company distributes an annual dividend of $0.32, which translates to a yield of 0.26% on the current market price.
During the fiscal third quarter that ended September 30, 2023, GE’s total revenues increased 19.9% year-over-year to $17.35 billion. Its non-GAAP profit came in at $1.62 billion, up 349.9% year-over-year, and non-GAAP EPS stood at $0.82, compared to a loss per share of $0.17 for the same period.
Also, the company’s non-GAAP free cash flow reached $1.67 billion, up 139.9% year-over-year.
The consensus EPS estimate of $0.73 for the fiscal first quarter ending March 2024 represents a 170.9% increase year-over-year. The consensus revenue estimate of $15.81 billion for the same quarter represents a 9.2% rise from the previous-year quarter. It surpassed EPS and revenue estimates in three of the four trailing quarters, which is impressive.
GE’s shares have gained 87.4% over the past year to close the last trading session at $121.18.
GE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
GE also has an A grade for Sentiment. It is ranked #10 out of 36 stocks in the B-rated Industrial – Manufacturing industry.
Click here to see GE’s additional POWR Ratings for Growth, Value, Momentum, Stability and Quality.
AptarGroup, Inc. (ATR)
ATR designs and manufactures a range of drug delivery, consumer product dispensing, and active material science solutions and services for the pharmaceutical, beauty, personal care, home care, and food and beverage markets. The company operates through three segments: Aptar Pharma; Aptar Beauty; and Aptar Closures.
On December 4, ATR announced a contract with the U.S. Food and Drug Administration (FDA) to study the challenges with developing low Global Warming Potential (low-GWP) propellant metered dose inhalers (MDIs).
On November 16, ATR declared a quarterly cash dividend of $0.41 per share. It pays an annual dividend of $1.64, which yields 1.29% on the prevailing price level.
During the fiscal third quarter that ended September 30, 2023, ATR’s net sales increased 6.7% year-over-year to $893 million. Its adjusted EBIT rose 30.6% from the previous-year quarter to $121.64 million. Moreover, adjusted net income attributable to ATR grew 38.9% and 39% year-over-year to $92.94 million and 1.39 per share.
ATR anticipates a robust finish to 2023 and looks forward to a positive outlook in 2024. The projected earnings per share for the fourth quarter 2023, excluding certain expenses, is expected to be in the range of $1.06 to $1.14.
Street expects ATR’s EPS and revenue to increase 22% and 5.5% year-over-year to $1.12 and $839.76 million in the fiscal fourth quarter ending December 2023, respectively. It surpassed EPS estimates in each of the four trailing quarters.
Over the past year, the stock has gained 18.8% to close the last trading session at $128.59.
ATR’s POWR Ratings reflect this optimistic outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ATR has a B grade for Stability, Sentiment, and Quality. Within the B-rated Industrial – Packaging industry, it is ranked #4 out of 20 stocks.
To access ATR’s additional Growth, Momentum, Sentiment, Stability, and Quality ratings, click here.
Limbach Holdings, Inc. (LMB)
LMB is a provider of integrated building systems solutions. The company operates in two broad segments: General Contractor Relationships and Owner Direct Relationships. It designs, installs, and maintains mechanical, electrical, plumbing, and control systems; and heating, ventilation, and air-conditioning (HVAC) systems.
In November, LMB acquired Industrial Air, LLC (IA), a specialty mechanical contractor based in Greensboro, North Carolina, for an initial enterprise value of $13.50 million in an all-cash transaction.
The acquisition expands LMB's presence in the industrial sector and aligns with its focus on executing opportunities and providing critical solutions. The deal includes contingent earn-outs of up to $6.50 million over the next two years, with Industrial Air expected to contribute an average of $30 million in revenue and $4 million in EBITDA annually.
In the fiscal third quarter that ended September 30, 2023, LMB’s revenue and gross profit increased 4.4% and 25.7% year-over-year to $127.77 million and $31.24 million, respectively. Its net income and EPS stood at $7.19 million and $0.61, up 97.5% and 79.4% from the year-ago quarter, respectively. Moreover, adjusted EBITDA increased 33.6% from the prior-year quarter to $13.63 million.
LMB revised its fiscal year 2023 guidance and it anticipates revenue in the range of $490 million to $520 million, with adjusted EBITDA projected to fall between $42 million and $45 million.
Analysts expect LMB’s revenue and EPS for the fiscal first quarter ending March 2024 to increase 9.1% and 53.7% year-over-year to $131.98 million and $0.42, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters.
The stock has gained 315.2% year-to-date to close the last trading session at $43.22. Over the past six months, it has gained 88.1%.
LMB’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
LMB has an A grade for Quality and a B for Growth, Momentum, and Sentiment. Within the A-rated Industrial – Services industry, it is ranked #5 out of 79 stocks.
Beyond what we’ve stated above, we have also rated the stock for Value and Stability. Get all ratings of LMB here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
GE shares were trading at $120.49 per share on Thursday morning, down $0.69 (-0.57%). Year-to-date, GE has gained 85.58%, versus a 24.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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