The industrial services market is growing steadily due to increased demand for services and advancements in technology, driven by expanded application segments and the rising need for engineering and maintenance services.
Thus, investors could consider securing top industrial stocks Gibraltar Industries, Inc. (ROCK), Quanex Building Products Corporation (NX), and Preformed Line Products Company (PLPC) to strengthen their portfolio next month.
This year, the industrial sector is expected to flourish amid widespread technology adoption for smart factories and resilience strategies. Reshoring and sustainability efforts are likely to drive manufacturing trends, while flexible workforce practices will address talent retention amidst supply chain disruptions.
Furthermore, last year, the Biden administration increased U.S. public and private funds for a multilateral infrastructure program in developing nations, surpassing the previously announced $30 billion figure, which should boost demand in the global industrial sector.
In addition, the industrial machinery market is experiencing rapid growth driven by technological advancements like IoT and robotics, enhancing efficiency across sectors. This strong demand is fostering innovation and driving sustained market expansion. The global industrial machinery market is projected to grow at a CAGR of 5.3% to reach $1.04 trillion by 2032.
Moreover, government investments and sector development drive global building materials market growth alongside rising demand for innovative, eco-friendly materials with enhanced strength. The global building materials market is expected to grow at a CAGR of 4.1% by 2030.
Besides, growth in the industrial metal industry is propelled by increasing demand for infrastructure development, expansion in manufacturing activities, technological advancements, and recovery in global economic activities.
Considering these conducive trends, let’s examine the fundamentals of three industrial stocks.
Gibraltar Industries, Inc. (ROCK)
ROCK is a leading manufacturer and distributor of building products serving North America and Asia markets. With a focus on renewable energy, residential, agtech, and infrastructure sectors, it offers a diverse range of solutions tailored to industry needs.
ROCK’s trailing-12-month levered FCF of 17.87% is 177.6% higher than the industry average of 6.44%. The stock's trailing-12-month ROTA of 7.33% is 52.5% higher than the 4.81% industry average.
During the third quarter, which ended September 30, 2023, ROCK’s adjusted net sales grew marginally year-over-year to $389.96 million. The company's adjusted income from operations and net income rose 18.9% and 19% from a year-ago quarter to $58.59 million and $42.48 million, respectively. Also, its adjusted net income per share increased 23.2% from the previous-year quarter to $1.38.
The company projects its adjusted EPS for the fiscal year 2023 to be in the range of $4.05 to $4.15, with consolidated net sales expected to be between $1.37 billion and $1.40 billion.
Street expects its revenue and EPS for the fiscal year ending December 2024 to surge 6.2% and 14.4% year-over-year to $1.46 billion and $4.71, respectively. Moreover, the company topped its EPS estimates in three of the trailing four quarters, which is notable.
The stock has surged 57.4% over the past nine months to close the last trading session at $86.14.
ROCK’s POWR Ratings reflect this strong outlook. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Growth, Momentum, and Sentiment and a B for Quality. In the Industrial - Metals industry, it is ranked first among 33 stocks.
Click here to see ROCK’s ratings for Value and Stability.
Quanex Building Products Corporation (NX)
NX supplies fenestration components and cabinet components to OEMs worldwide. Its product range includes insulating glass spacers, vinyl profiles, screens, and precision-formed metal and wood products.
On December 29, 2023, NX paid a quarterly cash dividend of $0.08 per share on the company’s common stock. The company pays $0.32 annually, which translates to a yield of 0.96% on the prevailing price level. Its four-year average dividend yield is 1.52%.
NX has raised its dividend payouts at a CAGR of 5.9% over the past five years. Moreover, it boasts a 15-year record for consecutive years of dividend payments.
NX’s trailing-12-month ROTA of 9.93% is 106.4% higher than the industry average of 4.81%. The stock's trailing-12-month asset turnover ratio of 1.45x is 80.4% higher than the 0.81x industry average.
NX reported net sales of $295.49 million in the fourth quarter, which ended October 31, 2023. Its adjusted net income and EPS grew 25.1% and 26.7% year-over-year to $31.23 million and $0.95, respectively. Moreover, its adjusted EBITDA for the same quarter rose 31.2% from a year-ago quarter to $50.77 million.
NX’s revenue and EPS are estimated to be $1.11 billion and $2.34, for the fiscal year ending October 2024. The company surpassed its revenue estimates in each of the trailing four quarters.
NX’s shares have increased 66.8% over the past nine months to close the last trading session at $33.45.
NX’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Growth, Value, Stability, and Sentiment. Within the A-rated Industrial - Building Materials industry of 45 stocks, it is ranked first.
In addition to the POWR Ratings stated above, access NX’s Quality ratings here.
Preformed Line Products Company (PLPC)
PLPC designs and manufactures products for energy, telecommunication, cable, and other industries. Its offerings include optical ground wire products, connectors, closures, and hardware assemblies used in overhead, ground-mounted, and underground networks.
On January 19, 2024, PLPC paid a regular quarterly dividend of $.20 per share on the company’s common shares. The company pays $0.80 annually, which translates to a yield of 0.60% on the prevailing price level. Its four-year average dividend yield is 1.10%.
PLPC’s trailing-12-month ROTA of 12.12% is 152% higher than the industry average of 4.81%. The stock's trailing-12-month CAPEX/Sales of 6.13% is 105.7% higher than the 2.98% industry average.
In the third quarter, which ended September 30, 2023, PLPC’s net sales amounted to $160.44 million. The company's operating income and net income increased 15.6% and 27.4% from the previous-year quarter to $20.08 million and $15.15 million, respectively. EPS attributable to PLPC rose 28.4% year-over-year to $3.03.
The stock has gained 41.7% over the past year to close the last trading session at $133.35.
PLPC’s optimistic 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.
It has an A grade for Value and a B for Sentiment and Quality. In the Industrial - Equipment industry, it is ranked #2 among 90 stocks.
To access additional ratings for PLPC’s Growth, Momentum, and Stability, click here.
What To Do Next?
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ROCK shares were trading at $85.00 per share on Tuesday morning, down $1.14 (-1.32%). Year-to-date, ROCK has gained 7.62%, versus a 4.51% 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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