This blog is devoted to helping investors make informed decisions. It will be regularly updated and provide opinions on earnings results. It is not intended to give investment advice and should not be taken as such. Consult your investment advisor.
In a salutary reminder that stock prices don't always move in tandem with current market conditions, stocks in the trucking industry soared in 2016. The standout performer wasNavistar International Corporation : its stock price positively decoupled from an already surging peer group following the announcement of an alliance with Volkswagen. As I write, Navistar stock is up more than 250% year to date. The question now is what to expect from 2017.
As you can see in the chart below, stocks in the trucking sector fell on average by 45% in 2015, but then (excluding Navistar) rose by 46% in 2016:
Those who follow the industrial sector will know it's outperformed the S&P 500 over the last year. Stocks such as Illinois Tool Works and 3M Company have delivered market-busting returns, and it's tempting to think that the anticipated recovery in U.S. industrial production in 2017 is already priced in. However, I believe there is still a strong investment thesis for buying into one of the best-performing industrial stocks in 2016: Parker-Hannifin Corporation.
FedEx Corporation stock was down a few percentage points after the company released its fiscal second-quarter results. In short, investors appear to be fretting over margin contraction in the quarter, caused by increased investment in the ground segment to prepare for e-commerce growth. That said, let's take a closer look at what went on by looking at five key takeaways from the earnings call.
Danaher Corporation has always been an unusual stock in the industrial sector. A heavy exposure to healthcare and environmental solutions used to make it the go-to stock when analysts were concerned about an economic downturn. Furthermore, the more cyclical bits of the business have been bundled together and spun off into a new company called Fortive Corporation , leaving Danaher even more exposed to non-cyclical end markets. Given that analysts expect 2017 to see a bounce back in industrial growth, is Danaher a good stock to buy?
Following Honeywell International Inc.'s(NYSE:HON) recent 2017 outlook meeting, it's a good time to reassess whether the stock is a good value investment. Let's factor in management's guidance to answer this question.
The investment thesis behind Honeywell International Inc.
This may seem esoteric, but bear with me: The best argument for buying the stock rests with its underlying free cash flow generation. With good FCF, a company can do many things, such as increase dividends, buy back shares (which enhances earnings), engage in value-adding acquisitions, or even simply pay off debt.
The Christmas period is always a pivotal time for package delivery companies, so investors will be wanting to size up the latest second-quarter 2017 earnings from FedEx Corporation while keeping an eye out on what they might mean for United Parcel Service, Inc. In that vein, let's take a look at the key facts from FedEx's earnings presentation on Tuesday.
It's well known that United Technologies Corporation is a good value stock, provided the company can get past its earnings headwinds in the next couple of years. To do that, management needs to successfully execute on its near-term plans to secure long-term earnings and cash flow. Let's look at each segment and pick out a key performance marker that investors need to look out for.
General Electric Company recently gave its 2017 annual outlook and reaffirmed it's on track to hit $2 in EPS by 2020. That's all well and good, but investors are always looking for upside potential from management's guidance. Well, the good news is there's plenty of it at General Electric, so let's look at five ways the company could exceed its earnings targets.
Now that the dust has settled on 3M Company's 2017 outlook meeting, it's time to take a deeper dive into what management outlined and what it means for investors. Here's a look at five key conclusions from the presentation and how they relate to the investment case for buying the stock.
2016 was the year when the market decided that industrial stocks were cheap and that buying into them ahead of a bounce in 2017 was a good idea -- an idea that held even as conditions worsened in the industrial economy as the year progressed. But what will 2017 bring? With many stocks now looking fully valued, picking the right ones is more important than ever. Let's look at three stocks that appear set to prosper: United Technologies(NYSE:UTX), Ingersoll-Rand Plc(NYSE:IR), andMSC Industrial Direct Co., Inc. (NYSE:MSM).
General Electric Company's oil and gas division and Baker Hughes Incorporated's management held an investor meeting recently to outline the rationale for their merger, which was announced back in October. As with the acquisition of Alstom's energy assets, GE management expects most of the synergies to come from cost rather than revenue. As such, it's tempting to think of the merger as creating a company set to generate earnings growth largely irrespective of the oil cycle.
Let's look at the cases for and against this argument.
Dividend Aristocrat Emerson Electric's payout of around 3.4% makes it a favorite of yield hunters, but for long-term income seekers, is the stock really worth buying ? The answer is likely to be shaped by events in the coming year, particularly as the company is undergoing significant restructuring.
Let's take a look at five things you need to know about Emerson Electric as an income investment, and why 2017 is such an important year for it.
Everyone knows dividend-seeking investors like top utility stocks. But if interest rates keep rising, what would it mean for the relative attractiveness of their dividend yields? With the U.S. presidential election over, Federal Reserve Chair Janet Yellen has been making increasingly hawkish statements on interest rates, so utility investors need to think carefully about 2017. That said, here's an analysis of the best utility stocks to buy.
Illinois Tool WorksInc. management has cheered investors by underpromising and overdelivering with its 2012-2017 enterprise strategy plan. A combination of cost cuts and focusing on more lucrative activities via Product Line Simplification (PLS) has led to operating margin expansion, even within moderately growing end markets. It's largely the reason behind the stock's outperformance this year, but can the strong run continue? Let's take a look at the company's investor day guidance and outlook, and see what it means for investors.
The Institute for Supply Management (ISM) released bullish survey results suggesting the U.S. manufacturing sector is in for a good start to 2017. The Purchasing Managers' Index (PMI), based on a survey of purchasing managers, is widely regarded as the best indicator of manufacturing conditions.The PMI is an index created by survey data, whereby a reading above 50 indicates economic expansion. For example, the ISM believes the 53.2 reading reported in November "corresponds to a 3.2 percent increase in real GDP annually."
As you can see below, it's been in positive territory for the last three months:
As I write, Rockwell Automation stock is up by a third on a year-to-date basis, but the question investors will be asking is whether the run can continue in 2017.
In this vein, let's look at management's commentary and outlook from the recent fourth-quarter results and investor conference. Here's what you need to know before making an investment decision.
United Technologies' management believes its stock is undervalued, and given the merger discussions earlier in the year, it's likely that Honeywell International's leadership feels the same way. The question is, should investors feel the same? Here's what you need to know before making an investment in United Technologies stock.
It's always interesting to look at stocks that have risen sharply, not least because analyzing the reasons might help in identifying future portfolio candidates. Let's look at three very different stocks that doubled in 2016 and discuss how best to find similar investments in 2017.
We are getting to the end of 2017, and it's time to reflect on whether the near-36% rise in Ingersoll-Rand Plc's stock price means the stock is overvalued or not. I would argue that, despite the strong rise, the stock still looks like a good value. Ingersoll-Rand faces some headwinds in 2017, but management has executed well this year in positioning the company for long-term growth. Here's how and why.
In a testimony to the benefit of value investing, Dover Corporation is up nearly 14% year to date despite weakening end market conditions in its oil-and-gas-focused sales and operational inefficiencies in its retail refrigeration segment. As you can see below, Dover, along with other oil-and-gas-heavy industrials like Emerson Electric , started the year at a generous valuation. However, now that the stock and valuation have risen, is it time to cash in gains?
It's no secret that General Electric Company intends to take a leadership position within the Industrial Internet of Things (IIOT), but what's less discussed is how integral it all is to the company's acquisition strategy. In a nutshell, the Baker Hughes Incorporated and Alstom energy assets deals were much more than mere industry consolidations. They actually represent a strategic deployment with IIOT at its heart. Here's how and why.
Machine vision company Cognex Corporation and security products manufacturer Allegion both have stocks that trade at a premium to the market and to their peer group. As you can see below, both stocks trade above a clutch of companies exposed to industrial automation and/or construction spending. Let's take a look at why.
What if you had a crystal ball and could see how earnings would change for your stocks? What would you do if you could see the earnings-per-share outlook deteriorate as end market conditions worsened for your investments? If the answer is "sell immediately," then the one investment lesson I learned in 2016 suggests you might be making a mistake. Here's why
In line with the rest of the industrial sector, the stock prices of FedEx Corp.(NYSE:FDX) and United Parcel Service(NYSE:UPS) received a boost following Donald Trump's election win. However, both shipping companies rely on global trade for a large part of their earnings, and a Trump presidency could pose an existential threat to that segment of their revenue streams. Should investors in the couriers be worried?
It's always useful to be invested in a few stocks that can perform well during all market conditions, because it helps provide balance to an investment portfolio. In this vein, O'Reilly Automatic, Inc.(NASDAQ:ORLY), Zoetis, Inc. (NYSE:ZTS), and the SPDR Gold Shares (NYSEMKT:GLD) ETF, as well as their respective sectors, have either already demonstrated an ability to grow revenue in a recession or possess qualities that can actually help them benefit from a recession.
Advance Auto Parts Inc. has certainly found the integration of Carquest stores to be a much-harder job than it originally expected, but the new management team has started off by giving investors what they want. Is this a sign that the company has finally turned the corner? And is it now ready to catch up with its sector peers AutoZone, Inc. and O'Reilly Automotive?
President-elect Donald Trump is determined to re-energize manufacturing in America. At the heart of his campaign lay proposals to renegotiate trade deals and implement policies directed at helping blue-collar America, rather than serving the interests of the global elite. While the ultimate repercussions of such policies on US and global growth are unclear, it's fair to say the aim is a relative shift toward manufacturing in the US. So let's take a look at five stocks set to benefit from his presidency.
With Illinois Tool Works and 3M Companynow trading for valuations at or near historic highs, it's time for investors to take a long hard look at whether they are still a good value. So let's analyze the key takeaways from Illinois Tool Works' latest earnings call, look at how and why the company is outperforming, and ask whether the stock is a good value or not. READ THE FULL EQUITY RESEARCH ARTICLE LINKED