U.S. manufacturing output witnessed a marginal dip last month amid the Fed’s tightening monetary policy. However, overall capacity utilization for the industrial sector rose to 79.0% from 78.9% in April. Andrew Hunter, the senior U.S. economist at Capital Economics, said, “There is still little in activity data to suggest a recession is on the horizon.”
Additionally, overwhelming demand and the Biden administration’s lucrative investments, like the recently declared $1.30 million for boosting industrial output in Arkansas, are expected to drive growth in the industry.
Moreover, bolstered by rapid technological advancements, the global smart manufacturing market is projected to grow at a CAGR of 13.4% from 2022 to 2030.
Thus, fundamentally sound manufacturing stocks Vishay Precision Group, Inc. (VPG), Core Molding Technologies, Inc. (CMT), Hillenbrand, Inc. (HI), and Mueller Industries, Inc. (MLI), which are rated ‘Strong Buy’ in our POWR Ratings system, could be ideal additions to your portfolio.
Vishay Precision Group, Inc. (VPG)
VPG designs, manufactures, and markets specialized sensors, weighing solutions, and measurement systems in the United States, Israel, the United Kingdom, the rest of Europe, Asia, and Canada. It operates through three segments- Sensors; Weighing Solutions; and Measurement Systems.
On May 9, 2022, Ziv Shoshani, VPG’s CEO, said, “With our strong balance sheet and cash flow, we continue to invest in our organic growth initiatives, as well as to look for value-creating acquisitions to add to our platform.”
For the first quarter ended April 2, 2022, VPG’s net revenues increased 24.2% year-over-year to $87.67 million. Its adjusted non-GAAP net earnings came in at $6.65 million, up 59.9% year-over-year, while its non-GAAP adjusted EPS came in at $0.49, up 58.1% year-over-year.
Analysts expect VPG’s revenue to be $360.90 million in 2022, representing a 13.5% year-over-year increase. The company’s EPS is expected to grow 16% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. VPG’s shares have gained 2.2% intraday to close the last trading session at $29.03.
VPG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
VPG has an A grade for Sentiment and a B grade for Growth, Value, Stability, and Quality. It is ranked first among 36 stocks in the A-rated Industrial - Manufacturing industry. Click here to see the additional POWR Ratings for Momentum for VPG.
Core Molding Technologies, Inc. (CMT)
CMT and its subsidiaries operate as molders of thermoplastic and thermoset structural products. It offers a wide range of manufacturing processes and is a leading engineered materials company specializing in molded structural products, principally in building products, utilities, transportation, and power sports industries.
On May 10, 2022, David Duvall, CMT’s President, and CEO, said, “We have increased our 2022 capital expenditures by approximately $5 million, to $20 million, to maximize our existing square footage with the addition of three new presses in our direct long fiber and structural foam processes, as well as robotic automation of three presses.”
He added, “These investments will increase capacity, as well as efficiencies, increase throughput, and leverage our labor to drive immediate revenue.”
CMT’s total net sales increased 24.4% year-over-year to $90.59 million for the first quarter ended March 31, 2022. Its net income came in at $3.86 million, up 11.8% year-over-year, while its EPS came in at $0.46, up 12.2% year-over-year. Moreover, its adjusted EBITDA came in at $9.52 million, up 10.7% year-over-year.
The stock has gained 7.5% year-to-date to close the last trading session at $9.15.
CMT's overall A rating translates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and Value and a B for Sentiment and Quality.
Within the Industrial – Manufacturing industry, CMT is ranked #2. Click here to see the additional POWR Ratings for Momentum and Stability for CMT.
Hillenbrand, Inc. (HI)
HI operates as a diversified industrial company in the United States and internationally. It operates through three segments- Advanced Process Solutions; Molding Technology Solutions; and Batesville.
On May 3, 2022, HI and Net Impact declared their collaboration for the Plastics & Circularity Case Competition 2022. This program aims to innovate and promote sustainability within the plastics value chain.
HI’s net revenue for its second quarter ended March 31, 2022, came in at $742 million, up 2.7% year-over-year. Its adjusted EPS came in at $1.01, up 3.1% year-over-year. Also, the company’s adjusted EBITDA came in at $137.30 million, up 2.2% year-over-year.
For fiscal 2022, analysts expect HI’s revenue to increase 2.2% year-over-year to $2.93 billion. Its EPS is estimated to grow 12% per annum over the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 2.3% intraday to close the last trading session at $39.63.
HI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Sentiment, and Quality. Within the same industry, it is ranked #3. Click here for the additional POWR Ratings for Momentum and Stability for HI.
Mueller Industries, Inc. (MLI)
MLI manufactures and sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. It operates through three segments- Piping Systems; Industrial Metals; and Climate.
On April 19, 2022, Greg Christopher, MLI’s CEO, said, “The continued expansion of residential construction, along with the development of the infrastructure necessary to support local communities, will continue to drive demand for our portfolio of products. We believe we are well poised to benefit from both this ongoing trend.”
For the first quarter ended March 26, 2022, MLI’s net sales came in at $1.01 billion, up 23.4% year-over-year. Its net income came in at $158.32 million, up 150.9% year-over-year. In addition, its EPS came in at $2.78, up 150.5% year-over-year.
MLI’s revenue is expected to increase marginally year-over-year to $3.80 billion in 2022. Its EPS is expected to grow 12% per annum for the next five years. Over the past nine months, the stock has gained 28.6% to close the last trading session at $51.94.
MLI's overall A rating translates to a Strong Buy in our POWR Rating system. The stock has a B grade for Growth, Momentum, and Quality. It is ranked #4 in the Industrial - Manufacturing industry. Click here to see the additional POWR Ratings for Value, Stability, and Sentiment for MLI.
VPG shares were trading at $28.48 per share on Wednesday afternoon, down $0.55 (-1.89%). Year-to-date, VPG has declined -23.28%, versus a -20.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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