Atkore (ATKR) was founded in 1959 and is one of the top industrial suppliers in the US. It produces and sells a variety of products including electrical conduits and fittings, metal framing and fittings, mechanical pipes, modular support structures, etc. It offers its products under the sub-brands: Allied Tube & Conduit, AFC Cable Systems, Heritage Plastics, Unistrut, Power-Strut, Cope, Calpipe brands, etc.

The company is benefitting from a variety of tailwinds such as a strong recovery in the industrial sector across the globe, a looming housing inventory shortage, expectations of strong CAPEX spending, and the recent passage of the infrastructure bill. Further, the company is a leader in its categories which is resulting in pricing power, boosting the company’s margins.

Read on to find out why ATKR is one of our top picks for 2022… 

Strong Position

The company has a dominant market share in several of its categories. And these products are essential for any construction or infrastructure project. This makes ATKR one of the best stocks for an inflationary environment as it is able to pass on price increases to its customers.

Additionally, ATKR’s management has demonstrated an ability to continually grow organically and through acquisitions of competitors, offering similar products. As a result, the company’s earnings and free cash flow have quadrupled over the last 4 years.

Earnings Momentum

2021 was a strong year for ATKR, with its stock price gaining more than 150% but this gain pales to its EPS growth of 300%. In 2022, I see further gains for ATKR as demand will remain strong due to positive trends in infrastructure spending, housing construction, and capital expenditures. 

In terms of infrastructure spending, there is expected to be a cumulative $11 trillion in infrastructure spending over the next decade by governments all over the world. Of course, the US government just passed its own $1 trillion+ package. Housing is another bullish area with a looming shortage given low inventories and the Millennial generation entering their 30s and 40s.

Similar to governments and households, businesses are expected to increase CAPEX spending over the next decade. This year, capital spending is expected to grow 15% and continue growing at a double-digit rate. The pandemic revealed that our supply chains are quite fragile and haven’t kept up with the world’s demand growth. This is evident in multiple areas such as energy, semiconductors, and autos. ATKR will be a major beneficiary as companies invest in increasing and maintaining capacity. 

Attractive Valuation

ATKR’s explosive earnings growth also means that it’s a rare ‘growth at a reasonable price’ opportunity given its forward P/E ratio of 13 which is significantly cheaper than the S&P 500’s forward P/E at 21. 

Further, ATKR has higher profit margins and higher growth rates when compared to other stocks or indices. For example, the S&P 500’s profit margin is 7%, while its revenue growth in the last quarter was 11%. To compare, ATKR’s profit margin is 23%, while it had 94% revenue growth in the last quarter. 

POWR Ratings

ATKR is one of the top-rated stocks according to the POWR Ratings with an overall A rating, which equates to a Strong Buy. 

The POWR Ratings are calculated by looking at 118 different factors to determine its future upside potential. A-rated stocks have enjoyed an average annual return of +30.72% which is four times better than the S&P 500’s average annual 7.1% gain since 1999. To learn more about ATKR’s POWR Ratings, click here.

ATKR is just one of 15 selections in my POWR Growth portfolio. That’s where I  combine my many years of investing experience with the Top 10 Growth Stocks strategy, which has +46.42% annual returns, to bring investors the best growth stocks for today’s market.

If you would like to see the current portfolio of 15 stocks and be alerted to our next timely trades, then consider starting a 30-day trial by clicking the link below.

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ATKR shares were trading at $108.02 per share on Friday afternoon, down $2.05 (-1.86%). Year-to-date, ATKR has gained 162.76%, versus a 21.87% rise in the benchmark S&P 500 index during the same period.

About the Author: Jaimini Desai

Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...

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