The manufacturing sector has been recovering steadily in 2021, driven by a near-zero interest rate environment and a robust federal recovery package. According to the Institute for Supply Management (ISM), its index of national factory activity jumped to a reading of 64.7 in March 2021 from 60.8 in February 2021, which was the highest level since December 1983.
President Joe Biden’s proposed $2 trillion-plus infrastructure plan is also expected to be a major tailwind for the manufacturing companies if passed. This has translated into growing investor interest in manufacturing stocks, as is evident by the Industrial Select Sector SPDR ETF’s (XLI) 24.3% gains over the past six months.
So, we think it is wise to buy the shares of manufacturing companies Corning Incorporated (GLW), The Timken Company (TKR), Mueller Industries, Inc. (MLI), and Vishay Precision Group, Inc. (VPG). These companies are well-positioned to generate big returns in the coming months based on their diversified operations.
Corning Incorporated (GLW)
Founded in 1851, GLW produces a wide range of glass and ceramic products for the optical communications, display technology, automotive, and life sciences markets, among others. The company is known for its sustained investment in RD&E, a unique combination of material and process innovation, and deep, trust-based relationships with its customers who are global leaders in their industries.
GLW’s $3.35 billion in net sales for its the fiscal year 2020 fourth quarter, ended December 31, 2020, represents an 18.9% year-over-year rise. Its gross profit has increased 42% year-over-year to $1.21 billion. The company’s net income has increased 688% year-over-year to $252 million. Also, its EPS increased 2700% year-over-year to $0.28.
For the quarter ended March 31, 2021 analysts expect GLW’s EPS and revenue to increase 115% and 23.5% year-over-year, respectively. Also, it surpassed consensus EPS estimates in each of the trailing four quarters.
On April 5, 2021, GLW announced the next phase in its long-term relationship with Samsung Electronics Co Ltd subsidiary Samsung Display Co., Ltd., which is a leading display technologies innovator.
The company also announced in March that it will receive $57 million in additional funding from the Biomedical Advanced Research and Development Authority (BARDA) through its partnership with the Department of Defense’s (DoD) Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense and Army Contracting Command. The stock has gained 112.7% over the past year to close yesterday’s trading session at $45.05.
It’s no surprise that GLW has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Growth and Momentum, and a B grade for Quality. Click here to see GLW’s rating for Value, Sentiment, and Stability.
GLW is ranked #16 of 45 stocks in the A-rated Industrial-Manufacturing industry.
The Timken Company (TKR)
TKR engineers, manufactures and markets bearings and power transmission products. It operates through two segments—Mobile Industries and Process Industries. Its offerings include gearboxes, belts, chain, lubrication systems, couplings, industrial clutches and brakes. The company’s portfolio features various brands, including Timken, Fafnir, Philadelphia Gear, Drives, Cone Drive, Rollon, Lovejoy and Groeneveld.
The company is scheduled to release its financial results for its fiscal year 2021 first quarter on April 28 before the market opens. For its fiscal year 2020 fourth quarter, ended December 31, 2020, TKR’s operating income increased 5.7% year-over-year to $98.80 million. Its Process Industries segment sales of $458 million represents a 1.5% year-over-year increase. Its EBITDA for the same segment came in at $99.90 million for the quarter compared to $96.8 million in the prior year period. The increase in EBITDA was driven primarily by cost reduction initiatives and favorable manufacturing performance.
Analysts expect the company’s EPS and revenue estimates to increase 30.4% and 23%, respectively, year-over-year for the quarter ending June 30, 2021. Also, TKR surpassed consensus EPS estimates in three of the trailing four quarters.
On March 25, TKR announced that it will serve as a science, technology, engineering and math (STEM) partner of the LeBron James Family Foundation. In February, the company was named among the World’s Most Ethical Companies by Ethisphere Institute for the 11th time. Also, it paid a quarterly cash dividend of $0.29 per share on March 4, 2021. The stock has rallied 131.2% over the past year and closed yesterday’s trading session at $81.18.
TKR’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. It has an A grade for Momentum, and a B grade for Value and Quality. In addition to these grades, one can see TKR’s ratings for Stability, Sentiment, and Growth here.
TKR is ranked #6 in the same industry.
Mueller Industries, Inc. (MLI)
MLI is a leading manufacturer of copper, brass, aluminum, and plastic products. Its products range from brass and plastic plumbing valves, refrigeration valves and fittings, and plastic fittings to faucets and malleable iron fittings. The company’s segments include Piping Systems, Industrial Metals, and Climate. Its operations are located across the United States, Canada, Mexico, South Korea, China, and Great Britain.
MLI’s $675.85 in net sales for its fiscal year 2020 fourth quarter (ended December 26, 2020) represents a 24.3% year-over year rise. Its operating income increased 46.2% year-over-year to $65 million. The company’s net income for the quarter came in at $36.40 million, up 29.3% year-over-year. Its EPS came in at $0.64, which represents a 28% year-over-year increase.
Analysts expect MLI’s EPS and revenue to increase 10.9% year-over-year and 16.1% year-over-year, respectively, in fiscal 2021.
The company paid a regular quarterly cash dividend of $0.13 per share on April 2, 2021. In addition, its Board of Directors also authorized the redemption of the company’s Subordinated Debentures due 2027. Furthermore, MLI signed an agreement in December 2020 to purchase the Hart & Cooley Flexible Duct business. The stock has gained 69.9% over the past year and closed yesterday’s trading session at $44.43.
MLI’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Momentum, Quality, and Sentiment. Click here to see additional POWR Ratings for MLI (Growth, Value, and Stability).
MLI is ranked #3 in the same Industry.
Vishay Precision Group, Inc. (VPG)
VPG is a designer, manufacturer and marketer of sensors and sensor-based measurement systems, specialty resistors and strain gages. The company operates through three business segments: Foil Technology Products, Force Sensors, and Weighing and Control Systems. Its products are used across various industries, including the military and aerospace, medical, steel, and construction, pharmaceutical, oil, chemical, paper, and food industries.
For its fiscal year 2020 fourth quarter, ended December 31, 2020, VPG’s total revenue increased 9.1% year-over-year to $75.45 million. Its gross profit increased 19% year-over-year to $28.75 million. The company’s operating income increased 237% year-over-year to $5.92 million. Its non-GAAP EPS came in at $0.43, up 53.6% year-over-year.
For the quarter ending June 30, 2021, analysts expect VPG’s EPS and revenue to increase 84.2% year-over-year and 16.7% year-over-year, respectively. Moreover, it surpassed consensus EPS estimates in three of the trailing four quarters.
On March 2, the company’s Micro-Measurements brand launched its model 700B welder unit, which is a portable, lightweight instrument ideal for installing weldable strain gages and temperature sensors to metallic surfaces in difficult industrial and outdoor field environments.
In February, VPG announced the North American launch of its LoadPro on-vehicle overload monitoring and load optimization system. The stock has rallied 39.6% over the past year and closed yesterday’s trading session at $31.36. It has also gained 15.1% over the past six months.
It’s no surprise that VPG has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has a B grade for Value, Sentiment, and Stability. Click here to see the additional POWR Ratings for VPG (Momentum, Quality, and Growth).
VPG is ranked #7 in the same industry.
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GLW shares were trading at $45.10 per share on Tuesday afternoon, up $0.05 (+0.11%). Year-to-date, GLW has gained 26.06%, versus a 10.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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