The stock market recovery since the panic-selling lows in March has been more than impressive. It has felt completely out of touch with the real economy and Main Street. When investors understand that the stock market is actually a market of stocks, eventually some of the unloved companies become worth a second look for value investors.
One sector that has many of its well-known companies left behind is the industrial sector. In America 2.0, or America 3.0, the industrial sector may not even feel like a significant part of the economy. Still, when you look around, there are countless items in infrastructure, equipment, buildings and so on that help this economy run. These things simply cannot be digitized and loaded into the cloud.
24/7 Wall St. has reviewed multiple value and turnaround screens, but many stocks that fall within the industrial sector could have significant upside in 2021. It’s probably a safe bet that this year will be one that many of these companies would rather pretend they didn’t exist. All these companies also still have to get through the upcoming election cycle.
This is that old-fashioned battery company that people would like to forget about, but that bunny just keeps on chugging along. Many traditional markets rely on Energizer Holdings Inc. (NYSE: ENR), and there are perhaps as many options to move into new markets with an already-solid brand name. The shares have lost more than 12% of their value since the beginning of March, and that has left the stock with almost 27% upside to the consensus analyst price target.
The stock closed Thursday at $40.24 a share, about 25% below its 52-week high and at a multiple of nearly 13 times expected 2021 earnings. Energizer pays an annual dividend of $1.20 (yielding 2.99%).
General Electric Co. (NYSE: GE) is the you-guess-it of industrials. If JPMorgan is right, it’s a dog. If BofA is right, it’s a home run. GE was looking better until the aviation sales went to zero, and now Larry Culp has found that sometimes even a great CEO still has worries ahead. GE is either a dirt-cheap value stock, based on the 2021 to 2022 metrics, or it’s a value trap.
Shares traded Thursday at $7.02, about 47% below their 52-week high. Based on estimated 2021 earnings of $0.35 per share, GE trades at a multiple of 20. The industrial giant pays an annual dividend of $0.04 (yielding 0.66%).
This stock has moved sideways, and defense stocks have not been that loved heading into the election. L3Harris Technologies Inc. (NYSE: LHX) makes many of the critical communications systems that are essential, and it may have much higher demand with each refresh cycle in the years ahead as the United States and partner nations have to defend against cyber threats.