Total industrial production increased 1% in July, following declines in the previous two months. Moreover, manufacturing output also saw a rise of 0.5%, driven by a notable 5.2% increase in motor vehicles and parts production, while other factory output saw a slight 0.1% rise.
Considering the rosy prospects of the industry, I think investors could consider buying quality industrial stocks Holcim Ltd (HCMLY), Heidelberg Materials AG (HDELY), CEMEX, S.A.B. de C.V. (CX), GMS Inc. (GMS), and Griffon Corporation (GFF) today. These stocks are rated an A, which translates to a Strong Buy in our proprietary rating system, POWR Ratings.
Building materials are in high demand in the commercial and infrastructure sectors due to increased foreign direct investment in projects like public spaces, sports stadiums, roads, and bridges. The growth is also supported by expansion and modernization in commercial spaces and urbanization trends.
As a result, the Global Building Materials Market reached $1.30 trillion last year and is expected to reach $1.70 trillion by 2030, growing at a CAGR of 3.9%.
In the US, the constant growth of sectors like highways, railways, tunnels, non-residential buildings, and mining are boosting the building industry.
Moreover, swift technological progress is poised to fuel innovation in industrial machinery manufacturing, propelling market growth. Notably, 3D printing, AI, and big data analytics are boosting manufacturing with increased productivity, reduced costs, and improved margins.
Thus, the global industrial machinery market grew from $506.67 billion last year to $545.67 billion in 2023 at a CAGR of 7.7%.
Let us take a look at the A-rated stocks:
Holcim Ltd (HCMLY)
Headquartered in Zug, Switzerland, HCMLY is a building materials and solutions company that offers cement, clinker, and other cementitious materials, aggregates, such as crushed stone, gravel, and sand, roofing systems, contracting, and services, etc.
On June 15, 2023, HCMLY acquired Minerales y Agregados, a leader in advanced mortars and adhesives in Guatemala, to improve its supply chain prospects while strengthening its geographical presence in North America. This move enhances supply chain potential, expands North American presence, supports green growth goals, and reinforces HCMLY’s product offerings.
The company pays an annual dividend of $0.51, which translates to a yield of 3.75% on the current market price, compared to a four-year average dividend yield of 4.05%. It has raised its dividend payout at a CAGR of 11.7% over the past three years.
In the half year of 2023, HCMLY’s net sales amounted to CHF13.07 billion ($14.86 billion), while its recurring EBIT stood at CHF2.04 billion ($2.32 billion). Its net income Group share rose 9% year-over-year to CHF1.26 billion ($1.43 billion). In addition, its EPS came in at CHF2.19, representing a 15.3% improvement year-over-year.
Analysts expect HCMLY’s EPS and revenue to rise 65.9% and 1.6% year-over-year to $1.30 and $31.53 billion in the fiscal year 2023.
The stock has gained 30.7% year-to-date to close the last trading session at $13.45.
HCMLY’s POWR Ratings reflect this 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, each weighted to an optimal degree.
It has an A grade for Momentum and Stability and a B for Quality. In the 47-stock A-rated Industrial – Building Materials industry, it is ranked first.
To see additional POWR Ratings for Growth, Value, and Sentiment for HCMLY, click here.
Heidelberg Materials AG (HDELY)
Headquartered in Heidelberg, Germany, HDELY is a cement company that produces and distributes cement, aggregates, ready-mixed concrete, and asphalt worldwide.
HDELY pays an annual dividend of $0.57, which translates to a 3.38% dividend yield on the current price level. Its four-year average dividend yield is 3.25%. Its dividends have grown at 60.9% CAGR over the past three years.
In the first half year, HDELY’s revenue increased 5.3% year-over-year to €10.47 billion ($11.39 billion). Profit for the period rose 31.2% year-over-year to €783 million ($851.51 million), while earnings per share adjusted for the additional ordinary result attributable to HDELY increased 15.6% year-over-year to €3.64.
HDELY’s EPS and revenue are expected to increase 19.3% and 4.4% year-over-year to $2.06 and $23.88 billion, respectively, for the fiscal year ending December 2023.
The stock has gained 58.4% over the past year to close the last trading session at $16.57.
HDELY’s sound fundamentals are evident in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
HDELY has an A grade for Value and Momentum and a B for Stability. It is ranked #7 within the same industry.
In addition to the POWR Ratings highlighted above, one can see HDELY’s ratings for Growth, Sentiment, and Quality here.
CEMEX, S.A.B. de C.V. (CX)
Based in Mexico, CX produces, distributes, and sells cement, ready-mix concrete, aggregates, clinker, and other construction materials worldwide. The company provides building solutions for housing projects, pavement projects, green building consultancy services, cement trade maritime services, and information technology solutions.
On August 3, 2023, CX and Synhelion announced a significant milestone in their joint effort to develop fully solar-driven cement production: the scaling of their technology to industrially-viable levels. This includes the continuous production of clinker, the most energy-intensive part of cement manufacturing, using only solar heat.
For its fiscal second quarter that ended June 30, 2023, CX’s net sales increased 13% year-over-year to $4.57 billion. Its gross profit stood at $1.58 billion, up 25% year-over-year, while operating EBITDA rose 34% from the prior-year quarter to $961 million.
CX’s revenue and EPS are expected to grow 18.9% and 13.2% year-over-year to $4.48 billion and $0.21, respectively, for the fiscal third quarter ending September 2023. Moreover, CX topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of CX have gained 89.9% year-to-date to close its last trading session at $7.69.
It’s no surprise that CX has an overall A rating, which equates to a Strong Buy in the POWR Ratings system.
It has an A grade for Momentum and a B for Growth, Sentiment, and Value. CX is ranked #2 within the same industry.
Click here to access the additional ratings for CX (Stability, Sentiment, and Quality).
GMS Inc. (GMS)
GMS is a specialty building products distributor specializing in ceiling products, steel framing products, insulation, lumber, ready-mix joint compound, fasteners, safety products, and other interior construction products. It provides a selection of building products and solutions for its residential and commercial contractor customer base across the United States and Canada.
On May 12, GMS refinanced its term loan, extending its maturity date by seven years. The new borrowings consist of a $500 million term loan facility due in 2030, which bears interest at a floating rate per annum of SOFR plus 3.0%.
GMS’ net sales increased 1.2% year-over-year to $1.30 billion in the fourth quarter that ended on April 30, 2023, while its gross profit rose 2.8% from the year-ago value to $424.48 million. The company’s adjusted EBITDA amounted to $154.34 million, representing a marginal increase from the prior-year quarter.
Also, its adjusted net income amounted to $88.59 million and $2.11 per share.
Street expects GMS’ revenue to increase 1.4% year-over-year to $1.38 billion in the fiscal first quarter (ended July 2023). Moreover, it surpassed the revenue estimates in all the trailing four quarters.
The stock has gained 37.7% year-to-date, closing the last trading session at $68.57.
GMS’ strong 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 Value and Quality. Within the same industry, it is ranked #4.
To see GMS’ ratings for Growth, Stability, and Sentiment, click here.
Griffon Corporation (GFF)
GFF provides consumer and professional home and building products in the United States, Europe, Canada, Australia, and internationally. It operates under the Consumer and Professional Products; and Home & Building Products segments.
On August 2, GFF announced that it had amended its credit agreement to increase the size of its revolving credit facility from $400 million to $500 million and extend the maturity of the Revolver Facility from March 22, 2025 to August 1, 2028.
Ronald J. Kramer, Chairman and CEO of the company, said, "The closing of our amended revolving credit facility provides us with additional financial and operating flexibility that will support our working capital requirements and position us to continue to grow our company and further enhance shareholder value."
On August 1, GFF declared a regular quarterly cash dividend of $0.125 per share, payable on September 14, 2023. Its dividend payouts have grown at CAGRs of 11.7% and 8.9% over the past three and five years, respectively. Also, it has a record of 11 years of consecutive dividend growth.
While its four-year average dividend yield is 3.49%, GFF’s annual dividend of $0.50 translates to a 1.18% yield on the prevailing prices.
GFF’s total revenue for the third quarter ended June 30, 2023, came in at $683.43 million. The company’s adjusted gross profit increased 4% year-over-year to $276.40 million. Its adjusted earnings per common share from continuing operations grew 4.9% year-over-year to $1.29.
GFF’s EPS is expected to rise 6.9% year-over-year to $4.35 in the current fiscal year ending September 2023.
The stock has gained 30.6% over the past three months to close the last trading session at $40.47.
GFF’s POWR Ratings reflect this robust outlook. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Momentum and Sentiment and a B for Growth, Value, and Quality. It is ranked #3 in the same industry.
Beyond the POWR Ratings stated above, we have also rated GFF for Stability. Get all the GFF ratings here.
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HCMLY shares were trading at $13.33 per share on Friday morning, down $0.13 (-0.93%). Year-to-date, HCMLY has gained 29.54%, versus a 14.54% 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.
5 A-Rated Industrial Stocks to Buy Today StockNews.com
