The U.S. economy expanded by 3.1 percent in the first half of 2018 driven by $1.5 trillion in tax cuts, and August consumer confidence was at its highest level since 2000. The U.S. economy is booming, and industrial stocks are reaping the benefits. Not only have industrial stocks been on the rise in 2018, their earnings multiples have been expanding. Many of these industrial stocks provide value, dividend yield and relative stability in an expensive and volatile market. Here’s a look at eight industrial stocks Bank of America likes in a red-hot U.S. economy.
3M
3M Co. (MMM) is one of the pillars of modern U.S. industry and manufacturing. 3M holds more than 500 patents, and its popular brands include Scotch, Post-It and Thinsulate. Bank of America analyst Andrew Obin says Wall Street will likely appreciate new 3M CEO Mike Roman’s [WD] direct communication style, which should help with investor transparency. MMM stock offers an opportunity to capitalize on the hot economy while also providing a relatively safe, diversified and cycle-resistant holding for long-term investors. Bank of America has a “buy” rating and $255 price target for MMM stock.
2. Allegion
Allegion (ALLE) was spun-off from Ingersoll-Rand (IR) back in 2013, and Obin says the security products and solutions leader is a better value these days than its parent company. Allegion specializes in security features such as locks, opening and closing devices and access control electronics. Obin is forecasting both full-year revenue growth and earnings per share growth of above 13 percent for Allegion in 2018, making the company one of the highest-growth multi-industry stocks Bank of America covers. Bank of America has a “buy” rating and $102 price target for ALLE stock.
3. AMETEK
AMETEK, Inc. (AME) operates an Electromechanical Group segment, which focuses on motor products, and an Electronic Instruments Group segment, which is devoted primarily to measurement instrumentation. Historically, AMETEK’s growth strategy has relied heavily on mergers and acquisitions, such as its recently announced $95 million buyout of camera monitor systems company Motec. Obin says AMETEK’s track record demonstrates it is disciplined with its acquisitions, a strategy which he expects will continue to drive double-digit EPS growth in 2019. Bank of America has a “buy” rating and a $91 price target for AME stock.
4. Dover
Dover Corp. (DOV) operates three segments: Engineered Systems, Fluids and Refrigeration and Food Equipment. The company’s new CEO Rich Tobin[WD] recently acknowledged that Dover management has had a difficult time estimating demand for its refrigeration business, resulting in inconsistent quarterly numbers. However, Obin says Tobin’s more realistic outlook will help generate more reliable guidance, and the company plans to update investors on its restructuring plan and long-term strategy in the near future. That clarity could result in earnings multiple expansion for the stock. Bank of America has a “buy” rating and $95 price target for DOV stock.
5. Eaton
Eaton Corporation (ETN) manufactures…
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