Industrial stocks are increasingly positioned for gains as global reindustrialization picks up speed, driven by supply chain transformations, reshoring trends, and investments in infrastructure. Thus, investors looking to capitalize on this trend might consider industrial stocks Siemens Aktiengesellschaft (SIEGY), Southern Copper Corporation (SCCO), and TE Connectivity plc (TEL), as they are positioned for better growth momentum.
The industrial sector stands to benefit from significant government investment in manufacturing, energy, and supply chain stability. The United States has shifted its major policy initiatives, including the Inflation Reduction Act, CHIPS Act, and Infrastructure Investment and Jobs Act, which collectively inject nearly $2.4 trillion into sectors like semiconductor manufacturing, electric vehicles, and renewable energy infrastructure.
As per Deloitte, approximately 86% of manufacturing executives responding to the latest industrial outlook survey indicate that in 2024, smart factory solutions will be one of the main competitive advantages supporting their endeavors for the next five years.
Additionally, the U.S. manufacturing sector contributes $2.65 trillion to the U.S. economy, employs nearly 13 million American workers, and accounts for 10.3 percent of the nation’s GDP. This further bolsters the outlook for the industrial stocks.
Considering these conducive trends, let’s look at the fundamentals of the above-mentioned stocks in detail:
Siemens Aktiengesellschaft (SIEGY)
Headquartered in Munich, Germany, SIEGY is a technology company that focuses on the areas of automation and digitalization internationally. It operates through five segments: Digital Industries, Smart Infrastructure; Mobility; Siemens Healthineers; and Siemens Financial Services (SFS).
On October 17, SIEGY launched BIMPOWER, a groundbreaking plug-in for Autodesk Revit, transforming the way engineers and contractors design 3D Building Information Modeling (BIM) projects. This launch simplifies the design and integrates seamlessly with Autodesk Revit, providing a comprehensive solution for engineers and contractors.
In the same month, the company also launched the RapidSBx switchboard to address the critical need for power distribution that feeds commercial switchboards and supports sustainable infrastructure. This new launch is flexible and durable and comes with easy installation, providing users with the adaptability needed for diverse environmental conditions.
In the fiscal third quarter that ended on June 30, 2024, SIEGY’s net sales increased 4.2% year-over-year to €18.90 billion ($20.53 billion). Its gross profit grew 9% from the prior year’s quarter to €7.75 billion ($8.42 billion).
Its EBITDA from continuing operations came in at €3.43 billion ($3.72 billion), up 36.3% year-over-year. In addition, the company’s net income rose 48.1% from the year-ago value to €2.13 billion ($2.32 billion), while its earnings per share stood at €2.48, up 56%% year-over-year.
Analysts expect SEIGY’s revenue for the first quarter (ending December 2024) to grow 4.1% year-over-year to $20.65 billion, while its EPS for the same quarter is expected to increase 60.9% year-over-year to $2.61. Moreover, the company has topped the EPS estimates in each of the trailing four quarters, which is excellent.
SIEGY shares have surged 46.7% over the past year to close the last trading session at $97.07.
SIEGY’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SIEGY has a B grade for Value and Stability. It is ranked #6 out of 34 stocks in the B-rated Industrial - Manufacturing industry. Click here to see the additional ratings for SIEGY (Growth, Momentum, Sentiment, and Quality).
Southern Copper Corporation (SCCO)
SCCO is an integrated producer of copper and valuable by-products. It operates the mining, exploring, smelting, and refining facilities in Peru, Mexico, Argentina, Chile, and Ecuador. Its operating segments include Peruvian operations; Mexican open-pit operations; and Mexican underground mining operations.
On October 17, backed by its strong financials, the company declared its shareholders a quarterly dividend of $0.70 per share and a stock dividend of 0.0062 shares per share of common stock, which is payable on November 21, to shareholders of record on November 6, 2024.
SCCO pays an annual dividend of $2.80, which translates to a yield of 2.50% at the prevailing price levels. Its four-year average dividend yield is 4.52%. The company’s dividend payments have grown at a CAGR of 8.5% over the past five years.
SCCO's sales for the third quarter (ended September 30, 2024) increased 17% year-over-year to $2.93 billion. The company reported an operating income of $1.45 billion, indicating a 35.6% growth from the prior-year quarter. SCCO’s adjusted EBITDA came in at $1.68 billion, up 30.5% year-over-year, while its net income per share grew 43.8% from the prior-year quarter to $1.15.
The consensus revenue estimate of $3.14 billion for the fiscal fourth quarter (ending December 2024) represents a 36.7% increase year-over-year. The consensus EPS estimate of $1.23 for the same quarter indicates a 114.9% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimate in three of the trailing four quarters.
The stock has gained 57% over the past year and 35.6% over the past nine months to close the last trading session at $109.55.
SCCO’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Quality and a B for Growth and Sentiment. Within the Industrial - Metals industry, it is ranked #4 out of 29 stocks. Click here to see SCCO’s ratings for Value, Momentum, and Stability.
TE Connectivity plc (TEL)
Based in Ballybrit, Ireland, TEL is a global industrial technology company that manufactures and sells connectivity and sensor solutions. The company operates through three segments: Transportation Solutions; Industrial Solutions; and Communications Solutions.
With 9 years of consecutive dividend growth, TEL pays an annual dividend of $2.60, which translates to a yield of 1.71% at the current share price. Its four-year average dividend yield is 1.62%. Also, the company’s dividend payouts have increased at CAGRs of 8.16% and 6.62% over the past three and five years, respectively.
For the fourth quarter that ended September 29, 2024, TEL posted total group revenue of $4.10 billion, indicating a marginal growth from the prior-year quarter. Its adjusted operating income increased 8% year-over-year to $755 million and the adjusted EPS came in at $1.95, up 9.6% year-over-year. Also, the company’s free cash flow amounted to $2.40 billion, reflecting an increase of 17% year-over-year.
According to TEL’s guidance for its fiscal first quarter, it is projecting sales to be approximately $3.90 billion. Additionally, its adjusted EPS is expected to grow 2% year-over-year, amounting to $1.88.
Street expects TEL’s revenue for the fiscal first quarter (ending December 2024) to increase 2.1% year-over-year to $3.91 billion. Its EPS for the same period is expected to register a 3.1% growth from the prior year, settling at $1.90. In addition, it surpassed the EPS in each of the trailing four quarters, which is promising.
Over the past year, the stock has gained 25.1%, closing the last trading session at $147.42.
It’s no surprise that TEL has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Value, Stability, and Sentiment. Out of 34 stocks in the B-rated Industrial - Manufacturing industry, TEL is ranked #4.
Beyond what is stated above, we’ve also rated TEL for Value, Momentum, and Stability. Get all TEL’s ratings 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.
SIEGY shares were trading at $98.38 per share on Friday afternoon, up $1.31 (+1.35%). Year-to-date, SIEGY has gained 7.35%, versus a 21.45% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
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