The forced shutdowns of businesses and supply chain disruptions hit the industrial sector hard last year. But it has regained momentum this year thanks to a decent uptick in demand for logistic, manufacturing, non-residential, and business outsourcing services. In addition, a rapid economic recovery, increased external demand, substantial fiscal stimulus, and widespread COVID-19 vaccinations should allow the sector to deliver impressive returns in the coming months.
Investor optimism surrounding the industrial sector’s prospects is evident in the Industrial Select Sector SPDR Fund’s (XLI) 15.5% returns year-to-date.
Industrial stocks Heidrick & Struggles International, Inc. (HSII), Heritage-Crystal Clean, Inc (HCCI), and Mistras Group, Inc. (MG) have been generating solid momentum lately. And we think their strong fundamentals and growth potential should help these stocks continue advancing in price.
Heidrick & Struggles International, Inc. (HSII)
HSII is a provider of senior-level executive search, culturing shaping, and leadership consulting services. The Chicago-based company also offers data-driven methodologies and insights to help clients to find leaders, build diverse, inclusive cultures, and transform the teams to achieve new performance levels.
Last month, HSII introduced Dustin Laws as a new consultant to its Executive Search business in the Americas. Law’s 15 years of experience should help HSII support clients in finding strategic talent solutions and in developing a mix of talent and skills that meets the dynamic business landscape’s demands.
HSII’s total revenue increased 76.7% year-over-year to $261.24 million in the second quarter, ended June 30, 2021. The company’s operating income came in at $28.71 million, versus a $23.99 million operating loss in the second quarter of 2020. Its net non-operating income grew 12.1% from its year-ago value to $3.07 million. Also, the company’s EPS came in at $1.03 compared to a $1.33 loss per share in the prior-year quarter.
Analysts expect HSII’s revenue for its fiscal year 2021 to be $932.95 million, representing 50.1% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 78.5% in the current year. Moreover, the stock has gained 52.7% in price over the past nine months and 93.2% over the past year.
HSII’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Value, Quality, and Growth. We’ve also graded HSII for Stability, Sentiment, and Momentum. Click here to access all HSII’s ratings.
HSII is ranked #2 of 20 stocks in the A-rated Outsourcing – Staffing Services industry.
Heritage-Crystal Clean, Inc (HCCI)
HCCI operates a nationwide network of branches and multiple waste recovery centers, including an oil refinery, regional antifreeze recovery centers, and wastewater treatment facilities. The company reuses, recycles, and re-refines materials and provides a sustainable environment to its communities and customers. HCCI is headquartered in Elgin, Ill.
For the second quarter, ended June 19, 2021, HCCI’s total revenue increased 47.5% year-over-year to $117.28 million. The company’s operating income came in at $20.62 million, compared to a $2.57 million operating loss in the second quarter of 2020. Its net income amounted to $15.11 million, versus a $2.66 million net loss in the prior-year quarter. Also, its EPS was $0.64, compared to a $0.11 net loss per share in the prior-year quarter.
HCCI’s revenue is expected to increase 20.1% year-over-year to $487.68 million in its fiscal year 2021. The company has an impressive earnings surprise history; it surpassed consensus EPS estimates in each of the four trailing quarters. Its EPS is expected to increase 494.7% in the current year. The stock has gained 39.5% in price over the past nine months and 80.4% over the past year.
HCCI’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Growth, and a B for Value and Quality.
In addition to the POWR Rating grades we’ve just highlighted, one can see HCCI’s ratings for Stability, Momentum, and Sentiment here. The stock is ranked #1 of 88 stocks in the B-rated Industrial – Services industry.
Mistras Group, Inc. (MG)
MG is a global provider of technology-enabled asset protection solutions to maximize the uptime and safety of critical energy, industrial, and public infrastructure. The company integrates asset protection throughout supply chains and centralizes integrity data through a suite of Industrial IoT-connected digital software and monitoring solutions. MS is based in Princeton Junction, N.J.
In June, MG’s Germany-based branch performed metrology services and geometric evaluation using 3D coordinates and deviations from the targets. This helped the client’s commercial and military-grade aircraft. The company’s data was also utilized as the basis for improvements in the component production process.
MG’s revenue increased 42.8% year-over-year to $177.68 million for the second quarter ended June 30, 2021. The company’s gross profit grew 34.4% from the year-ago value to $55.34 million. Its income from operations came in at $11.37 million, compared to a $383,000 loss from operations in the second quarter of 2020. Also, the company’s net income amounted to $5.95 million, versus a $2.67 million net loss in the prior-year quarter.
For its fiscal year 2021, analysts expect MG’s revenue to be $677.33 million, representing 14.3% year-over-year growth. In addition, its EPS is expected to increase 300% in the current year. MG’s stock price has surged 31.9% in price over the past nine months and 132.3% over the past year.
It’s no surprise that MG has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth, and a B for Value and Sentiment.
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HSII shares were trading at $43.63 per share on Wednesday morning, up $0.82 (+1.92%). Year-to-date, HSII has gained 50.20%, versus a 19.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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