The following companies have grown their allocations of cash to the purchase of property, plant and equipment significantly over recent years, with the aim of upgrading their operating activities. This may indicate these companies anticipate a higher demand for their goods and services, which could translate into higher sales if everything goes smoothly for them.
Wall Street sell-side analysts also recommend these stocks, as sell-side analysts have issued positive ratings for them.
Texas Pacific Land Trust
The first company which investors may be interested in is Texas Pacific Land Trust (TPL, Financial), a Dallas, Texas-based manager of various land and related mineral resources in West Texas. The company also engages in water sourcing, disposal and treatment solutions as well as infrastructure development and well testing services.
The company allocated $32.21 million to the purchase of fixed assets in full-year 2019, increasing enormously from the $221,000 allocated in 2015.
Morningstar analysts predict that after a 47.9% decline this year, the company's net earnings will increase by 14.8% in 2021.
On Wall Street, the stock holds one strong buy recommendation rating with a price target of $810 per share.
The stock traded at $692 per share at close on Friday for a market capitalization of $5.37 billion. The share price declined by only 0.42% over the past year.
The price-earnings ratio is 26.48 versus the industry median of 12.81, the price-book ratio is 10.34 versus the industry median of 0.96 and the price-sales ratio is 15.84 versus the industry median of 0.86.
CMC Materials Inc
The second company investors may be interested in is CMC Materials Inc (CCMP, Financial), an Aurora, Illinois-based provider of consumable materials to several North American and international semiconductor manufacturers.
CMC Materials invested $125.84 million in additions to property, plant and equipment in full fiscal 2020, growing dramatically from $13.81 million in full fiscal 2015.
Morningstar analysts forecast that after a decline of 3.1% this year, the company's earnings per share will grow again next year by 4.4%, and over the next five years by a yearly average of 13%.
On Wall Street, the stock holds three buy recommendation ratings and two hold recommendation ratings for an average target price of $154.80 per share.
The stock traded at $144.66 per share at close on Friday for a market capitalization of $4.21 billion as a result of a 5.45% growth over the prior 52 weeks.
The price-earnings ratio is 29.95 versus the industry median of 29.83, the price-book ratio is 3.97 versus the industry median of 2.57 and the price-sales ratio is 3.84 versus the industry median of 2.4.
Installed Building Products Inc
The third company investors may want to consider is Installed Building Products Inc (IBP, Financial), a Columbus, Ohio-based installer of building equipment such as insulation, waterproofing, fire-stopping, fireproofing systems, garage doors, rain gutters, window blinds and others. The company's business focuses on the continental part of the United States of America.
Installed Building Products spent $50.17 million for the purchase of property and equipment in full-year 2019, which marks an 83.7% growth compared to $27.31 million allocated in the full year 2015.
Morningstar analysts predict that earnings per share will increase by 31.9% this year, by 30.4% in 2021 and by 36.3% per annum over the next five years.
On Wall Street, the stock holds two strong buy recommendation ratings, five buy recommendation ratings and one hold recommendation rating for an average target price of $116.09 per share.
The stock traded at $93.76 per share at close on Friday for a market capitalization of $2.79 billion following an increase of nearly 34% over the past year.
The price-earnings ratio is 31.46 versus the industry median of 14.04, the price-book ratio is 9.15 versus the industry median of 1.06 and the price-sales ratio is 1.73 versus the industry median of 0.64.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 Fast-Growing Small Caps to Consider
- A Trio of Non-Cyclical Stocks for the Value Investor
- A Trio of Highly Profitable Businesses with Good Financial Strength
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