The industrial sector, which includes manufacturing, construction, and more, has a solid footing, with several factors such as technological innovation, sustained consumer demand for industrial products and services, growing investments in infrastructure, and favorable government funding and policies, attributing to the sector’s growth.
Given the industry’s tailwinds, it could be wise to invest in fundamentally sound industrial stocks Siemens Aktiengesellschaft (SIEGY), AptarGroup, Inc. (ATR), and Amada Co. Ltd. (AMDLY) for substantial returns.
Despite labor shortages and continued supply chain disruptions, the manufacturing industry stands sturdy and will continue to witness significant growth in the foreseeable future. Production of industrial goods, including aircraft, automobiles, chemicals, consumer electronics, heavy machinery, oil, and steel, is exceeding pre-pandemic levels.
With the rapid expansion of the manufacturing sector, the industrial machinery industry is poised for significant profitability in the upcoming years. Further, the industry’s prospects are driven by the demand for automation and the modernization of the production process. The industrial machinery market is estimated to reach $777.35 billion in 2028, growing at a CAGR of 7.2%.
The industrial packaging market is also picking pace with the increasing volume of resources and products being transported across various regions. Amid the rigid plastic regulations, more and more companies are engaging and launching new and innovative products in line with the changing demand for sustainable and recyclable industrial packaging.
The industrial packaging market is expected to be valued at $66.27 billion in 2024. The market is further anticipated to grow at a CAGR of 4.7% during the forecast period (2024-2029), resulting in a market volume of $83.45 billion by 2029.
Supportive government funding & policies and numerous technological advancements will further shape industrial manufacturing trends this year and beyond.
Government initiatives, such as the CHIPS and Science Act, which allocates $50 billion for the domestic semiconductor industry, and the Infrastructure Investment and Jobs Act (IIJA), which sets aside $1.2 trillion for transportation and infrastructure, are creating new avenues for the industry players.
The manufacturing sector is notably making a transformative shift from machine-based assembly lines to “smart factories,” using AI, the Internet of Things (IoT), robotics, data analytics, and other advanced technologies. The movement, known as Industry 4.0, is the next stage of the digitalization of manufacturing, fueled by advances in automation and connectivity.
Investor’s interest in industrial stocks is evident from the Industrial Select Sector SPDR Fund’s (XLI) 10.4% returns over the past six months.
Given the industry’s solid growth prospects, investing in fundamentally strong industrial stocks SIEGY, ATR, and AMDLY could be wise for future gains.
Let’s discuss the fundamentals of these stocks in detail:
Siemens Aktiengesellschaft (SIEGY)
Headquartered in Munich, Germany, SIEGY is a leading technology company that emphasizes automation and digitalization worldwide. The company operates through Digital Industries; Smart Infrastructure; Mobility; Siemens Healthineers; and Siemens Financial Services (SFS) segments.
On February 15, 2024, SIEGY supplied 200 VersiCharge wallboxes and an intelligent charging management system to the Portuguese Infinity building, one of the tallest residential sites in Lisbon, Portugal. The contract includes delivery of SICAM Dynamic Load Management, a solution by SIEGY to use grid capacity efficiently.
With this deal, SIEGY is preparing one of Portugal’s tallest buildings for the future of eMobility. The integrated EV (Electric Vehicle) charging solution customized by SIEGY’s engineering and software teams in Portugal allows for dynamic and intelligent on-site charging management.
On February 6, SIEGY and Italian distribution system operator (DSO), Areti announced their collaboration on the RomeFlex project to test the ability to manage congestion and voltage volatility across the stressed power grids of Italy's capital city. Areti will use SIEGY’s technology to forecast grid congestion and request flexibility on MV and LV grids.
With SIEGY’s expertise and software, Areti is managing challenges related to climate change and ‘the electrification of everything,’ heavily impacting power grids in Italy and all around the world.
Also, on February 5, SIEGY announced the release of a new generative artificial intelligence (AI) functionality into its predictive maintenance solution – Senseye Predictive Maintenance. The new generative AI functionality makes predictive maintenance more conversational and intuitive.
With the new release, SIEGY will make human-machine interactions and predictive maintenance more efficient and faster by enhancing proven machine learning capabilities with generative AI.
For the fiscal 2024 first quarter that ended December 31, 2023, SIEGY’s revenue grew 1.9% year-over-year to €18.41 billion ($19.84 billion). The company’s gross profit rose 3.1% year-over-year to €7.18 billion ($7.74 billion). Its income from continuing operations came in at €2.53 billion ($2.73 billion), up 54.2% from the prior year’s quarter.
In addition, SIEGY’s net income for the quarter amounted to €2.55 billion ($2.74 billion), or €2.99 per share, a 55.7% and 61.6% growth from the previous year’s quarter, respectively. Its free cash flow from continued and discontinued operations was €1.05 billion ($1.13 billion), an increase of 1,118.6% year-over-year.
Street expects SIEGY’s revenue for the third quarter (ending June 2024) to increase 3.9% year-over-year to $21.55 billion. The company’s EPS for the same quarter is expected to grow 38.5% year-over-year to $1.26. Moreover, the company topped the consensus EPS estimates in three of the trailing four quarters, which is impressive.
Shares of SIEGY have surged 21.6% over the past six months and 15.5% over the past year to close the last trading session at $90.71.
SIEGY’s solid fundamentals are reflected in its POWR Ratings. 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, each weighted to an optimal degree.
SIEGY has a B grade for Value, Growth, and Stability. It is ranked #3 out of 35 stocks in the B-rated Industrial - Manufacturing industry.
In addition to the POWR Ratings we’ve stated above, we also have SIEGY ratings for Momentum, Sentiment, and Quality. Get all SIEGY ratings here.
AptarGroup, Inc. (ATR)
ATR designs and manufactures a variety of drug delivery, consumer product dispensing, and active material science solutions and services for markets, including pharmaceutical, beauty, personal care, home care, and food and beverage. It operates through Aptar Pharma; Aptar Beauty; and Aptar Closures segments.
On February 9, 2024, ATR’s Aptar Digital Health and Biogen Inc. (BIIB) entered into an enterprise agreement to operate and develop digital health solutions for neurological and rare diseases. Under the agreement, Biogen will transfer ownership of select digital health solutions to Aptar Digital Health.
The new partnership model leverages Aptar Digital Health’s capabilities to assist in the development and operation of new and existing digital health solutions globally. The initial scope of the multi-year agreement covers various indications in neurology and immunology across 15 countries.
On January 19, ATR declared a quarterly cash dividend of $0.41 per share. The payment date for the dividend is February 22, 2024, to stockholders of record as of February 1, 2024.
ATR pays an annual dividend of $1.64, which translates to a yield of 1.19% at the current share price. Its four-year average dividend yield is 1.27%. Moreover, the company’s dividend payouts have increased at a CAGR of 3.8% over the past three years. Aptar has raised its dividends for 30 consecutive years.
During the fourth quarter that ended December 31, 2023, ATR’s net sales increased 5.3% year-over-year to $838.48 million. Adjusted net income attributable to ATR rose 28.6% and 27.4% from the prior year’s quarter to $81.45 million and $1.21 per share, respectively. Its adjusted EBITDA was $179.45 million, up 22.3% year-over-year.
In addition, the company’s free cash flow came in at $138.49 million, an increase of 40.3% from the previous year’s period.
Analysts expect ATR’s revenue and EPS for the first quarter (ending March 2024) to increase 3.9% and 20.8% year-over-year to $893.45 million and $1.15, respectively. Furthermore, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
ATR’s stock has gained 13.1% over the past six months and 24.2% over the past year to close the last trading session at $137.50.
ATR’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Quality, Stability, and Sentiment. ATR is ranked #4 among 19 stocks in the B-rated Industrial – Packaging industry.
Click here to access all ATR’s ratings.
Amada Co. Ltd. (AMDLY)
Based in Isehara, Japan, AMDLY manufactures, sells, leases, repairs, maintains, checks, and inspects metalworking machinery, software, and peripheral equipment in Japan, North America, Europe, Asia, and internationally. The company offers sheet metal fabrication machines, including laser machines and punch & laser combination machines.
On October 4, 2023, AMDLY announced the three-dimensional laser integrated system, “ALCIS-1008e,” at Photonix 2023. The ALCIS (Advanced Laser Cube Integrated System) is a three-dimensional laser integrated system that can perform various types of laser machining like cutting, welding, and layered manufacturing, all in one machine.
With the new system, AMDLY can support the high-speed and high-quality processing of highly reflective materials such as copper, for which demand is increasing. The system provides high-precision laser machining to meet the needs of highly variable manufacturing.
On September 5, AMDLY commenced the sales of its new products in the HRB series of next-generation large press brakes. These machines expand the range of possible processing by enabling the bending and deep bending of thick sheet metal and large items.
The new HRB series products expand the large-scale machine range to seven models, with support for long and med-to-thick material from 350 tons/3 meters to 600 tons/7 meters. It enables support for steel material processing and also considers environmental concerns.
In the nine months that ended December 31, 2023, AMDLY’s sales revenue increased 10.2% year-over-year to ¥285.22 billion ($1.90 billion), while its gross profit rose 10.9% from the prior year’s period to ¥125.90 billion ($838.18 million). Its operating profit came in at ¥40.25 billion ($268 million), up 15% year-over-year.
Furthermore, the company’s net income and earnings per share amounted to ¥28.01 billion ($186.48 million) and ¥81.51, indicating increases of 16.5% and 17.9% year-over-year, respectively.
As per the company’s updated guidance for the fiscal year 2023, AMDLY’s sales revenue is expected to be ¥395 billion ($2.63 billion). The company expects gross profit of ¥175 billion ($1.16 billion) and net income of ¥39 billion ($259.64 million).
Street expects AMDLY’s revenue for the fiscal year (ending March 2024) to increase 96.7% year-over-year to $2.66 billion. In addition, the company has surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past six months, the stock has gained 17.8% to close the last trading session at $40.51.
AMDLY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Quality and Stability. Within the A-rated Industrial - Machinery industry, AMDLY has topped the list of 80 stocks.
Click here to access additional ratings of AMDLY for Growth, Momentum, and Sentiment.
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.
SIEGY shares were unchanged in premarket trading Monday. Year-to-date, SIEGY has declined -1.02%, versus a 5.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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