The industrial sector is rapidly expanding, indicating economic well-being and positioning for a global economic resurgence, fueled by technological advances and government infrastructure development.
Therefore, fundamentally strong industrial stocks Rio Tinto Group (RIO), Heidelberg Materials AG (HDELY) and Boise Cascade Company (BCC) could be worth watching.
The industrial sector's expansion is being driven by rising demand for industrial tools and services across numerous industries, as well as technical improvements and environmental laws. The adoption of environmentally friendly solutions drives up the demand for novel industrial tools.
Moreover, the global green building materials market is expected to reach $490.80 billion by 2028, exhibiting a CAGR of 9.7%. The increased demand for sustainable, eco-friendly solutions, energy-efficient structures, and green building materials is driving the expansion over the predicted period.
In addition, the industry 5.0 market is expected to reach $866 billion by 2036, growing at a CAGR of 20%. Investors’ interest in industrial stocks is evident from the Industrial Select Sector SPDR Fund (XLI) 11.6% gains over the past three months and 11.3% gains over the past six months.
Considering these conducive trends, let’s take a look at the fundamentals of the three Industrial stocks.
Rio Tinto Group (RIO)
RIO, headquartered in London, the United Kingdom, engages in global exploration, mining, and processing of mineral resources. The company operates through Iron Ore; Aluminium; Copper; and Minerals segments.
RIO’s trailing-12-month ROCE of 16.82% is 145.6% higher than the industry average of 6.85%. Its trailing-12-month net income margin of 16.39% is 188.5% higher than the industry average of 5.68%.
For the year that ended December 31, 2023, RIO’s consolidated sales revenue and operating profit stood at $54.04 billion and $14.82 billion, respectively. For the same period, underlying earnings and basic underlying earnings per ordinary share stood at $10.06 billion and 616.50 cents, respectively.
As of December 31, 2023, AAL’s current assets stood at $21.51 billion, compared to $18.97 billion as of December 31, 2022.
Analysts expect RIO’s revenue to come in at $54.36 billion for the year ending December 2024, increase marginally year-over-year. Its EPS is expected to grow 18.4% year-over-year to $8.63 for the same period. The stock has gained 9.2% over the past six months to close the last trading session at $65.48.
RIO’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 assess stocks by 118 different factors, each with its own weighting.
RIO has a B grade for Stability, Sentiment and Quality. Within the Industrial - Metals industry, it is ranked #6 out of 33 stocks. To see additional POWR Ratings for Growth, Value and Momentum for RIO, click here.
Heidelberg Materials AG (HDELY)
Headquartered in Heidelberg, Germany, HDELY produces and distributes cement, aggregates, ready-mixed concrete, and asphalt globally. The company offers cement products, natural stone aggregates, crushed aggregates, and ready-mixed concrete for use in the construction of tunnels, bridges, office buildings, and schools.
HDELY’s trailing-12-month gross profit margin of 100% is 256.1% higher than the 28.08% industry average. Its trailing-12-month ROCE of 11.47% is 70s.3% higher than the 6.74% industry average.
In the year ended on December 31, 2023, HDELY reported a operating revenue of €21.31 billion ($23.15 billion). The company’s operating EBIT came in at €3.02 billion ($3.29 billion), up 32.5% from the previous year’s quarter. Its profit attributable to Heidelberg Materials AG shareholders and EPS rose 20.8% and 23.4% from the year-ago value to €1.93 billion ($2.10 billion) and €10.43, respectively.
HDELY’s revenue is expected to come in at $23.54 billion for the year ending December 2024 up 2.2% year-over-year. Its EPS is expected to grow 9.9% year-over-year to $2.40 for the same period. Over the past year, the stock has gained 41.1% to close the last trading session at $19.13.
It’s no surprise that HDELY has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Momentum and a B for Growth, Value and Stability. It is ranked #10 out of 45 stocks in the A-rated Industrial - Building Materials industry.
Beyond what is stated above, we’ve also rated HDELY for Sentiment and Quality. Get all HDELY ratings here.
Boise Cascade Company (BCC)
BCC engages in the manufacture of wood products and the distribution of building materials in the U.S. and Canada. It operates through the Wood Products and Building Materials Distribution segments.
BCC’s trailing-12-month ROTC of 14.67% is 115.3% higher than the industry average of 6.81%. Its trailing-12-month ROTA of 13.98% is 188.9% higher than the industry average of 4.84%.
For the fiscal fourth quarter that ended December 31, 2023, BCC’s sales stood at $1.64 billion. Moreover, its adjusted EBITDA stood at $160.58 million.
For the same quarter, its net income and net income per common share stood at $97.54 million and $2.44, respectively. As of December 31, 2023, BCC’s total assets stood at $3.46 billion, compared to $2.24 billion as of December 31, 2022.
Street expects BCC’s revenue to come in at $7.13 billion for the year ending December 2024, up 4.3% year-over-year. Its EPS is expected to come in at $11.42 for the same period. It is expected to surpass EPS in three of four trailing quarters. Shares of BCC have gained 79.1% over the past year to close the last trading session at $125.11.
BCC has an overall B rating, equating to a Buy in our POWR Ratings system.
BCC’s is ranked #2 out of 5 stocks in the Industrial - Wood industry. It has a B grade for Value, Momentum and Quality. To see additional BCC’s ratings for Growth, Stability and Sentiment, click 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.
RIO shares were trading at $65.63 per share on Thursday afternoon, up $0.15 (+0.23%). Year-to-date, RIO has declined -11.86%, versus a 6.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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