>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Margaret Moran
Margaret Moran
Articles (451) 

3 Industrial Stocks Trading Near Their GF Value

As the sector rallies on hopes of economic recovery, these potentially undervalued players could see gains

February 09, 2021 | About:

Just by looking at the major market indexes in the U.S., such as the S&P 500, one might never guess that we are still in a recession. However, while the economy does influence the stock market, it is far from the only thing that can shift the direction of prices, meaning the two can (and often do) become extremely disconnected.

One area of the market that has not seen as much of a bull run in the face of adverse conditions is the industrial sector, which investors are well aware is tied to the health of the economy. The Industrial Select Sector SPDR (XLI) ETF gained only 8.69% in 2020 compared to the overall S&P 500's 16.16% run. Meanwhile, the Schiller price-earnings ratio for the industrial sector as a whole stands at 28.80, the fourth-lowest compared to other industries (energy, financial services and consumer defensive are all lower as of the writing of this article).

76ee77ee96b389903487a973daebc2dc.png

Now, new Covid-19 cases and jobless claims are showing modest declines, the U.S. economy is expected to grow approximately 4% in 2021 and there is a possible federal infrastructure plan on the horizon. Given these stimulus measures, many analysts are turning bullish on the industrial sector to benefit on the expected recovery.

Investors looking for opportunities to benefit from the recovery of the industrial sector may want to consider the following stocks, as they are trading near or below their intrinsic value as calculated by the GuruFocus Value Line. The GF Value considers the following factors:

  1. The historical multiples (price-earnings ratio, price-sales ratio, price-book ratio and price-to-free-cash-flow) that the stock has traded at.
  2. A GuruFocus adjustment factor based on the company's past returns and growth.
  3. Future estimates of the business performance from Morningstar analysts.

Curtiss-Wright

Curtiss-Wright Corp. (NYSE:CW) is a diversified industrial product manufacturer and service provider headquartered in Davidson, North Carolina. The company provides leading edge sensors, controls, subsystems and mission critical components to a wide variety of industries, primarily defense, commercial aerospace and energy.

On Feb. 9, shares of Curtiss-Wright traded around $113.12 compared to their GF Value of $127.75 for a price-to-GF Value ratio of 0.89, earning the stock a rating of modestly undervalued.

d26faed3eacc34e45a77f7a2e968e4a2.png

The company has a financial strength rating of 5 out of 10, a profitability rating of 8 out of 10 and a business predictability rating of 4.5 out of 5 stars. The Piotroski F-Score of 5 out of 9 and Altman Z-Score of 3.4 are typical of a financially stable company. The return on invested capital has surpassed the weighted average cost of capital in recent years, indicating the company is creating value.

2b3648966a16d6e32fb9892092caaf39.png

The top guru shareholder of the company is PRIMECAP Management (Trades, Portfolio) with 4.13% of shares outstanding, followed by Mario Gabelli (Trades, Portfolio) with 0.76% and Ken Fisher (Trades, Portfolio) with 0.25%.

C.H. Robinson Worldwide

Based in Eden Prairie, Minnesota, C.H. Robinson Worldwide Inc. (NASDAQ:CHRW) is a transportation, third-party logistics and supply chain company. Its offerings include freight transportation, transportation management, brokerage and warehousing, as well as truckload, air freight, intermodal and ocean transportation.

On Feb. 9, shares of C.H. Robinson traded around $91.87 compared to their GF Value of $90.27 for a price-to-GF Value ratio of 1.01, earning the stock a rating of fairly valued.

24f7cb5811737c2499a8bf18651d4758.png

The company has a financial strength rating of 6 out of 10, a profitability rating of 7 out of 10 and a business predictability rating of 1 out of 5 stars. The cash-debt ratio of 0.17 is low, but the Altman Z-Score of 6.09 shows the company is not in financial distress. The ROIC consistently beats the WACC, indicating the company is creating value for shareholders.

1902fa6613d80ac75b8933c693f0889d.png

The company's top guru shareholder is First Eagle Investment (Trades, Portfolio) with 7.80% of shares outstanding, followed by Mairs and Power (Trades, Portfolio) with 0.97% and Jim Simons (Trades, Portfolio)' Renaissance Technologies with 0.70%.

WESCO International

WESCO International Inc. (NYSE:WCC) is a multinational electrical, communications, utility distribution and supply chain solutions company based in Pittsburgh. It provides things like electrical supplies, logistics expertise and systems capabilities to companies around the world.

On Feb. 9, shares of WESCO International traded around $76.62 compared to the GF Value of $82.78 for a price-to-GF Value ratio of 0.93, earning the stock a rating of fairly valued.

a08009547728e16010296ab6ea858b26.png

The company has a financial strength rating of 4 out of 10, a profitability rating of 6 out of 10 and a business predictability rating of 1 out of 5 stars. The Piotroski F-Score of 4 out of 9 is typical of a stable company, though the cash-debt ratio of 0.07 is lower than 89% of competitors. The WACC is typically higher than the ROIC, indicating that the company's growth is not profitable.

821716e664dc3ecfe9ac86a62bb679d2.png

The top guru shareholder of the company is Diamond Hill Capital (Trades, Portfolio) with 4.83% of shares outstanding, followed by Robert Olstein (Trades, Portfolio) with 0.43% and Hotchkis & Wiley with 0.22%.

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.


Rating: 0.0/5 (0 votes)

Comments

Dr. Paul Price
Dr. Paul Price - 2 months ago    Report SPAM

Margaret,

Your title says these are under fair value but your data say 2 out of the three are not.

Please leave your comment:



Performances of the stocks mentioned by Margaret Moran


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)