The recession worries and the inflationary environment have been concerns for investors looking to benefit from the economic recovery. However, The U.S. economy added slightly more jobs than expected in April, as the Nonfarm payrolls grew by 428,000, a bit above the Dow Jones estimate of 400,000.

According to a Federal Reserve report, the total industrial production rose at an 8.1% annual rate for the first quarter. Moreover, President Joe Biden’s $1 trillion bipartisan infrastructure bill, which includes $550 billion in new spending for building roads, rails, and bridges, is expected to help the sector grow significantly in the upcoming months.

Given this backdrop, it could be wise to bet on fundamentally sound industrials stocks Robert Half International Inc. (RHI - Get Rating) and Franklin Electric Co., Inc. (FELE - Get Rating), which have declined lately but hold substantial upside potential.

Click here to check out our Industrial Sector Report for 2022

Robert Half International Inc. (RHI - Get Rating)

RHI provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The company operates through temporary and Consultant Staffing; permanent placement staffing; risk consulting; and internal audit services. B of A Securities upgraded the stock from Neutral to Buy.

On May 3, 2022, RHI announced that its board of directors had approved a quarterly cash dividend of $0.43 per share. The cash dividend will be paid on June 15, 2022, to all shareholders of record as of May 25, 2022.

RHI’s net sales increased 29.8% year-over-year to $1.81 billion in the first quarter, which ended March 31, 2022. The company’s net income came in at $168.24 million, representing a 52.1% year-over-year increase. Also, its EPS came in at $1.52, up 55.1% year-over-year.

Analysts expect RHI’s EPS and revenue to increase 19.5% and 28.7% year-over-year to $1.59 and $1.90 billion, respectively, for the quarter ending June 30, 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 10.7% over the past year to close yesterday’s trading session at $98.74.

RHI’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

The stock has an A grade for Quality and a B grade for Value. RHI is ranked #7 of 18 stocks within the A-rated Outsourcing – Staffing Services industry. Click here to see RHI’s rating for Stability, Growth, Momentum, and Sentiment as well.

Franklin Electric Co., Inc. (FELE - Get Rating)

FELE designs, manufactures, and distributes water and fuel pumping systems worldwide. It operates through three segments: Water Systems, Fueling Systems, and Distribution. The company sells its products to wholesale and retail distributors, specialty distributors, original equipment manufacturers, industrial and petroleum equipment distributors, and oil and utility companies. Seaport Global upgraded the previous rating of Neutral to Buy.

On April 25, 2022, FELE announced that its Board of Directors declared a quarterly cash dividend of $0.20 per share payable May 19, 2022, to shareholders of record on May 5, 2022.

FELE’s net sales increased 36% year-over-year to $451.50 million in the first quarter, which ended March 31, 2022. The company’s operating income grew 18% year-over-year to $39.90 million, while its net income came in at $30.12 million, representing a 6.9% year-over-year increase. Also, its EPS came in at $0.63, up 6.8% year-over-year.

For the quarter ending June 30, 2022, analysts expect FELE’s EPS to come in at $1.05, representing a 26.5% year-over-year increase. It surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, its revenue is expected to increase 21.3% year-over-year to $2.02 billion in fiscal 2022.

FELE’s strong fundamentals are reflected in its POWR Ratings. We have graded FELE for Growth, Momentum, Stability, Sentiment, Quality, and Value. Click here to access all of FELE’s ratings. FELE is ranked #14 out of 37 stocks in the A-rated Industrial – Manufacturing industry.

RHI shares were unchanged in after-hours trading Friday. Year-to-date, RHI has declined -12.64%, versus a -13.13% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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