The industrial sector has recently experienced notable growth thanks to technological advancements and modernization of production processes. Given the industry’s steady growth prospects, investors could consider quality industrial stocks Albany International Corp. (AIN), Resideo Technologies, Inc. (REZI), and Taylor Devices, Inc. (TAYD) for positive investments.

The industrial sector has been remarkably resilient in the face of geopolitical instability and strikes at several major automakers. Moreover, the industry is expected to thrive due to increasing investment in automation and digitization. Industrial production in the United States grew 0.3% year-over-year in November.

Additionally, the industrial machinery market has been growing steadily over the years, fueled by the growth of the manufacturing sector, especially in developing countries.

Manufacturers are increasingly adopting advanced technologies like the Internet of Things (IoT), Artificial Intelligence (AI), and Robotics to enhance the efficiency and productivity of their machinery. Global industrial machinery market revenue is expected to increase at a 5.3% CAGR until 2032.

Also, the need for predictive maintenance services will increase throughout, driving the industrial service market. Since industrial organizations use expensive equipment and incur considerable depreciation costs, asset management is essential. The global industrial services is expected to grow at a CAGR of 5.7% until 2032.

Considering these conducive trends, let’s take a look at the fundamentals of the three best industrial stocks.

Albany International Corp. (AIN)

ANI together with its subsidiaries, engages in the textile and materials processing business. The company operates in two segments, Machine Clothing (MC) and Albany Engineered Composites (AEC).

AIN pays $1.04 annually as dividends, which translates to a yield of 1.14% at the current price. Its four-year average dividend yield is 1.07%. Its dividend payouts have grown at 9.5% CAGR over the past three years.

AIN’s trailing-12-month gross profit margin of 36.80% is 21.6% higher than the 30.28% industry average. Its trailing-12-month EBITDA margin of 21.83% is 59% higher than the 13.73% industry average.

AIN’s net revenues increased 7.9% year-over-year to $281.11 million for the fiscal third quarter that ended September 30, 2023. Its net income increased 153.5% year-over-year to $27.15 million and earnings per share attributable to company shareholders increased 155.9% year-over-year to $0.87.

Street expects AIN’s revenue to increase 11% year-over-year to $298.29 million in the fiscal fourth quarter (ended December 2023). Its EPS is expected to increase 11.3% year-over-year to $0.84. Additionally, it has topped consensus revenue in each of the trailing four quarters, which is impressive.

The stock has gained 6.2% over the past three months to close its last trading session at $91.58.

AIN’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has a B grade in Stability and Sentiment. It is ranked #3 out of 5 stocks in the A-rated Industrial – Textiles industry.

Beyond what is stated above, we’ve also rated AIN for Value, Momentum, Quality and Growth. Get all AIN ratings here.

Resideo Technologies, Inc. (REZI)

REZI develops, manufactures, and sells comfort, energy management, and safety and security solutions to the commercial and residential end markets in the United States, Europe, and internationally. The company operates in two segments, Products and Solutions, and ADI Global Distribution.

On December 7, 2023, REZI and Ford announced a joint simulation project to explore vehicle-to-home (V2H) energy management called the “EV-Home Power Partnership,” designed to explore the potential of electric vehicle batteries to support optimal home energy management.

REZI’s trailing-12-month EBIT margin of 9.98% is 1.4% higher than the industry average of 9.84%. Its trailing-12-month asset turnover ratio of 0.98x is 22.6% higher than the industry average of 0.80x.

REZI’s net revenue for the third quarter ended September 30, 2023, came in at $1.55 billion. Its adjusted gross profit came in at $417 million. The company’s net income stood at $21 million. In addition, its adjusted net income per share came in at $0.41.

Analysts expect REZI’s EPS for the fiscal fourth quarter ended December 2023 to increase 95.6% year-over-year to $0.51. The company’s revenue will likely reach $1.52 billion in the same quarter.

Shares of REZI have gained 10.2% over the past three months to close the last trading session at $17.03.

It’s no surprise that REZI has an overall rating of B, which equates to Buy in our proprietary rating system.

REZI has a B grade for Growth, Stability, and Momentum. It is ranked #7 out of 79 stocks in the B-rated Industrial – Services industry.

In addition to the POWR Ratings highlighted above, one can access REZI’s ratings for Value, Quality, and Sentiment here.

Taylor Devices, Inc. (TAYD)

TAYD engages in design, development, manufacture, and marketing of shock absorption, rate control, and energy storage devices for use in machinery, equipment, and structures in the United States, Asia, and internationally.

TAYD’s trailing-12-month EBITDA margin of 23.47% is 71% higher than the 13.73% industry average. Its trailing-12-month levered FCF margin of 26.66% is 343.4% higher than the 6.01% industry average.

In the fiscal second quarter (ended November 30, 2023), TAYD’s sales came in at $10.34 million, while its net earnings increased 26.9% year-over-year to $1.98 million. The company’s EPS increased 24.4% year-over-year to $0.56.

TAYD’s shares have gained 12.8% over the past six months and to close the last trading session at $28.31.

It’s no surprise that TAYD has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

It has an A grade for Quality and Momentum and a B in Value and Sentiment. Within the A-rated Industrial – Machinery industry, it is ranked #3 out of 79 stocks.

In addition to the POWR Ratings we’ve stated above, we also have TAYD’s ratings for Growth and Stability. Get all TAYD 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.

2024 Stock Market Outlook >

AIN shares were trading at $89.57 per share on Tuesday afternoon, down $2.01 (-2.19%). Year-to-date, AIN has declined -8.81%, versus a -0.21% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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