The infrastructure industry has been on a steady rise in recent years. Fueled by decreasing mortgage levels, increasing global spending, technological advancements, and government intervention, the industry shows no sign of stopping.
Amid this backdrop, investors could scoop up shares of fundamentally stable infrastructure stocks, Parker-Hannifin Corporation (PH), Owens Corning (OC), and Applied Industrial Technologies, Inc. (AIT). These stocks are set to benefit from rising global spending and could give exciting profits to investors.
The infrastructure sector is poised to benefit significantly from current market dynamics. With mortgage levels dropping to their lowest in nearly 15 months, the demand for housing has been on the rise. Additionally, the Federal Reserve’s interest rate cut in September could enhance the industry’s growth prospects.
Moreover, the industry's embrace of digital innovation is set to redefine its future. The increasing adoption of digital twins for asset management and design reflects a commitment to transformation. The shift signifies that the infrastructure sector is actively adapting to modern demands.
Furthermore, the Biden-Harris Administration’s announcement of $1.8 billion in grants for 148 infrastructure projects across the United States illustrates the government’s commitment to revitalizing this vital sector. The funding could impact various states and support the development of essential infrastructure in the coming years.
In line with this, Mordor Intelligence forecasts the infrastructure sector to expand to $3.69 trillion by 2029, growing at a CAGR of 6.3%. The projected growth underscores the immense opportunities available to investors willing to engage with this dynamic and evolving market.
Now, let us dive deep into the fundamentals of three infrastructure stocks that are benefitting from the positive industry dynamics, starting with #3.
Stock #3: Parker-Hannifin Corporation (PH)
PH manufactures and sells motion and control technologies for mobile, industrial, and aerospace markets. The company operates through two segments: Diversified Industrial and Aerospace Systems. It provides products to original equipment manufacturers, distributors, direct sales employees, and more.
On July 29, PH announced the signing of an agreement to divest its North America Composites and Fuel Containment (CFC) Division to SK Capital Partners, a private investment firm. By divesting this division, PH can allocate resources more effectively toward high-growth segments.
For the fiscal 2025 first quarter that ended September 30, 2024, PH’s net sales increased 1.2% year-over-year to $4.90 billion. Its adjusted net income attributable to common shareholders and adjusted earnings per share grew 4.3% and 4% from the year-ago value to $809.79 million and $6.20, respectively.
As of September 30, 2024, PH’s total current assets amounted to $7.03 billion, compared to $6.80 billion on June 30, 2024.
Analysts expect PH’s revenue for the fiscal 2025 second quarter (ending December 2024) to increase marginally year-over-year to $4.86 billion. Its EPS is expected to grow 2.9% from the prior year’s period to $6.33. Moreover, the company topped the revenue and EPS estimates in all four trailing quarters, which is impressive.
Shares of PH have surged 36.5% over the past nine months and 71.9% over the past year to close the last trading session at $634.07.
PH’s POWR Ratings reflect its positive fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PH has an A grade for Sentiment and a B for Stability and Quality. It is ranked #23 out of 86 stocks in the Industrial – Equipment industry.
To check the stock’s ratings for Growth, Value, and Momentum click here.
Stock #2: Owens Corning (OC)
OC develops, manufactures, and markets insulation, roofing, and fiberglass composites. This company has maintained its Fortune 500® status for 69 consecutive years. It creates solutions that save energy and enhance comfort in commercial and residential buildings. OC operates in three segments: Roofing; Insulation; and Composites.
On May 15, OC announced the completion of its acquisition of Masonite International Corporation, a global provider of interior and exterior doors and door systems for an approximate transaction value of $3.9 billion. By integrating Masonite's extensive portfolio, OC can leverage new growth opportunities and expand its customer base.
For the fiscal 2024 second quarter that ended June 30, OC’s net sales increased 8.8% year-over-year to $2.79 billion. Its adjusted EBITDA rose 11.7% from the year-ago value to $742 million.
Moreover, the company’s adjusted earnings and adjusted EPS attributable to OC common stockholders grew 5.2% and 9.2% from the previous year’s quarter to $408 million and $4.64, respectively.
Street expects OC’s revenue and EPS for the fiscal year ending December 2024 to increase 14.3% and 7% year-over-year to $11.06 billion and $15.42, respectively. Moreover, the company topped the consensus EPS estimates in each of the four trailing quarters, which is impressive.
Shares of OC have surged 16.7% over the past nine months and 55.9% over the past year to close the last trading session at $176.79.
OC’s solid prospects are projected in its POWR Ratings. OC has an A grade for Momentum. It is ranked #19 out of 44 stocks within the B-rated Industrial – Building Materials industry.
Click here to see OC’s ratings for Growth, Value, Sentiment, Quality, and Stability.
Stock #1: Applied Industrial Technologies, Inc. (AIT)
AIT operates as a value-added distributor and technical solutions provider for industrial motion, fluid power, flow control, and automation technologies. The company supplies related maintenance products. It operates through two segments: Service Center Based Distribution and Engineered Solutions.
On May 6, AIT announced the closing of its acquisition of Grupo Kopar, a Mexico-based provider of emerging automation technologies and engineered solutions. The strategic acquisition could position AIT to enhance its technological capabilities and broaden its service offerings in the automation sector.
For the fiscal 2025 first quarter that ended September 30, 2024, AIT’s net sales marginally increased year-over-year to $1.10 billion. Its operating income came in at $113.17 million. Additionally, the company’s net income and net income per share came in at $92.06 million and $2.36, respectively.
The consensus revenue estimate of $4.53 billion for the fiscal year ending June 2025 reflects a rise of 1.1% year-over-year. Its EPS for the same period is expected to rise marginally from the prior year to $9.76. Moreover, the company topped the consensus EPS estimates in each of the trailing four quarters.
Shares of AIT have surged 26.4% over the past six months and 50.9% over the past year to close the last trading session at $231.59.
AIT’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality. It is ranked #25 out of 86 stocks in the Industrial – Equipment industry.
Click here to check out AIT’s ratings for Growth, Value, Momentum, and Stability.
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.
PH shares rose $7.14 (+1.13%) in premarket trading Friday. Year-to-date, PH has gained 38.82%, versus a 20.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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