Industrials

6 Industrials That Offer Value and High Potential Upside for 2021

L3Harris Technologies stock closed Thursday at $185.44 a share, about 20% below their 52-week high. Based on estimated 2021 earnings of $12.87 per share, L3Harris trades at a multiple of 14.4. The industrial giant pays an annual dividend of $3.40 (yielding 1.87%).

3M

Investors recently have seen much better monthly numbers from 3M Co. (NYSE: MMM). Its stock now trades above the consensus target price, but analysts were burned so badly in 2018 and 2019 that there have been very few official upgrades and the ratings remain very weak here. It’s not worth debating that the stock was above $250 at the start of 2018, but at 17 times normalized earnings, it still has room for modest dividend hikes to continue.

3M stock closed at $172.38 on Thursday, about 5.6% below the 52-week high of $182.55. Shares already trade above the consensus price target of $164.67, but the annual dividend of $5.88 (yielding 3.47%) makes up for a lot of the share price softness.

U.S. Steel

This is one of many sob stories in America’s corporate history, and United States Steel Corp. (NYSE: X) stock remains widely disliked while so many of its end-user customers are hurting. Still, any continued recovery in steel prices will benefit the company, and its stock just hasn’t recovered along with some of the other industrials and metals companies.

Analysts are seeing a very wide loss in 2020 and, while next year is expected to improve, it may not be until 2022 that U.S. Steel again posts an annual profit. One ray of hope: the company’s market cap is about half its tangible book value. That may be meaningless, or it may indicate that U.S. Steel has some hidden value.

Shares closed Thursday more than 40% below their 52-week high at $8.41. Consensus estimates call for U.S. Steel to post a net loss of $6.08 per share this year and $1.56 next year. The company’s $0.04 annual dividend (yielding 0.52%) doesn’t offer any sweetener for investors either.

MSC Industrial Direct

MSC Industrial Direct Co. Inc. (NYSE: MSM) manufactures so many industrial products for so many different markets that it’s nearly impossible to focus on just one area in its vast product catalog. Earlier this week, the company reported that August sales improved 3% month over month. Unfortunately, for the fiscal year ended in August, sales were down more than 5%. More than half of the company’s sales are made online.

MSC offers a solid annual dividend of $3.00 (yielding 4.67%), and it could do carve-outs or bolt-ons in a lot of areas if it chooses to grow or become more focused.

Shares closed nearly 19% below their 52-week high on Thursday at $64.89. Based on estimated 2021 earnings, the stock has a multiple of about 14.4 and an implied upside of about 11.2%, based on the consensus 2020 earnings estimate of $4.58 per share.