Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 16.4% gain over the past six months, beating the S&P 500 by 10 percentage points.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. Keeping that in mind, here are three industrials stocks boasting durable advantages.
Comfort Systems (FIX)
Market Cap: $64.79 billion
Formed through the merger of 12 companies, Comfort Systems (NYSE:FIX) provides mechanical and electrical contracting services.
Why Do We Love FIX?
-
Backlog has averaged 53.1% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
-
Free cash flow margin grew by 9.5 percentage points over the last five years, giving the company more chips to play with
-
Returns on capital are climbing as management makes more lucrative bets
At $1,854 per share, Comfort Systems trades at 38.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Acuity Brands (AYI)
Market Cap: $8.69 billion
One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.
Why Does AYI Stand Out?
-
Annual revenue growth of 9.1% over the last two years beat the sector average and underscores the unique value of its offerings
-
Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 45.1%
-
Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.8% exceeded its revenue gains over the last five years
Acuity Brands is trading at $288.61 per share, or 13.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
BWX (BWXT)
Market Cap: $17.84 billion
Contributing components and materials to the famous Manhattan Project in the 1940s, BWX (NYSE:BWXT) is a manufacturer and service provider of nuclear components and fuel for government and commercial industries.
Why Will BWXT Beat the Market?
-
Market share has increased this cycle as its 15.5% annual revenue growth over the last two years was exceptional
-
Expected revenue growth of 14.7% for the next year suggests its market share will rise
-
Free cash flow margin increased by 8.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders