Last month, the U.S. added 126,000 jobs, and unemployment remained unchanged at 5.5%. Since the jobs figure was well under economist estimates of 248,000 jobs, it’s reasonable to be wary of the performance of industrial stocks. These companies’ are involved in home building, manufacturing, and other activities tied to the state of the economy.
GuruFocus provides an All-In-One-Screener that can be used to narrow stock choices with more than 150 filters. For this article, we screened for industrial companies headquartered outside the U.S., in which at least five gurus are currently buying as of the fourth quarter. The following are the top five stocks in terms of number of gurus with current positions.
According to the All-In-One-Screener, 18 gurus currently hold positions in Eaton Corp, a company incorporated in Ireland that provides energy-efficient solutions to help customers manage electrical, hydraulic, and mechanical power.
During the fourth quarter, Andreas Halvorsen (Trades, Portfolio) initiated a new position in the stock, buying 1,791,937 shares at an average price of $65.93 per share. Richard Snow (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), and Paul Tudor Jones (Trades, Portfolio) each added to their existing positions in the company.
Eaton’s stock price has declined 7% over the past year and currently trades at $68.63 with a P/E ratio of 18.1 and P/S ratio of 1.4.
In FY 2014, the company reported net income of $1,793 million, a slight decline from $1,861 million the year before. However, over the past five years, net income has increased more than 17%.
EBIT per share in 2014 was $3.79, down from $4.50 in 2013. The graph below shows Eaton’s earnings trend over time.
Chicago Bridge & Iron (CBI, Financial)
As of the fourth quarter, 11 gurus hold positions in Chicago Bridge & Iron. For six of these gurus, CBI is a new addition to the portfolio. In terms of portfolio weighting, David Einhorn (Trades, Portfolio) purchased the largest stake, with 2,940,000 shares that accounted for 1.6% of his portfolio.
Chicago Bridge & Iron is headquartered in The Hague, Netherlands and provides conceptual design, technology, engineering, and environmental services to customers in the energy infrastructure market throughout the world. The stock has declined 41% over the past year and currently trades at $49.37.
When comparing the price to the Peter Lynch earnings line, the stock is undervalued.
In 2014, EBIT per share jumped to $9.00 from $6.37 the year before. Over the past five years, this earnings figure has grown almost 32%.
GuruFocus rates CBI’s business predictability as a perfect 5-stars. The current P/E ratio is 9.6 and the P/S ratio is 0.4.
Ten gurus currently hold positions in Pentair, an industrial manufacturing company, as of the fourth quarter. Robert Olstein (Trades, Portfolio) initiated a new position during the quarter, while Joel Greenblatt (Trades, Portfolio) added to his existing stake.
Pentair’s four operating segments are valves and controls, process technologies, flow technologies, and technical solutions. The stock price has declined 17% over the past year and is now priced at $64.96, with a P/E ratio of 58.9 and P/S ratio of 1.71.
After reported losses in 2011 and 2012, Pentair has improved its net income since then. In FY 2014, net income was $215 million, though this was a decline from the prior year’s $537 million.
The current dividend yield is 1.8%, which is near the two-year high, while the payout ratio is 35%.
AerCap Holdings (AER, Financial)
As of the fourth quarter, 10 gurus hold shares in AerCap Holdings, and six of these investors added to their existing positions during the quarter. David Dreman (Trades, Portfolio) was the only guru who initiated a new, albeit small, position with 593 shares.
AerCap Holdings is incorporated in the Netherlands and is an integrated aviation company, conducting aircraft leasing and trading aircraft. It provides aircraft, engines, and parts to customers in every major geographical region.
The stock price has increased 14% over the past year and now trades at $45.65. The current P/E ratio is 10.7 and the P/S ratio is 2.34.
The company’s operating margin has been improving over time, increasing 24% over the past five years. In 2014, the margin was 50.71%.
One cause for concern is that AerCap took on a large amount of long-term debt in 2014, with the debt level increasing from $6,237 million to $30,402 million.
Ten gurus currently hold stakes in Allegion, an Ireland-based firm that provides security products for homes and businesses. For five of these gurus, which include Steven Cohen (Trades, Portfolio) and Andreas Halvorsen (Trades, Portfolio), Allegion is a new addition to the portfolio.
The stock has increased 19% over the past year and is now priced at $61.63 with a P/E ratio of 33.7 and P/S ratio of 2.8.
In 2014, EBIT per share was $3.36, up from $2.51 the year before. The following graph shows the earnings trend since 2011.
The current dividend yield is 0.6%, and the payout ratio is 17%. The low payout ratio indicates the company has plenty of room to grow its dividend in the future.
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