We recently published a list of 8 Best Industrial Stocks To Buy According to Analysts. In this article, we are going to take a look at where Pitney Bowes Inc. (NYSE:PBI) stands against other best industrial stocks to buy according to analysts.
Overview of The Industrial Sector
According to a report published on March 6th, 2024 by S&P Global, nearly half of the S&P 500 stocks hit an all-time high in 2024. From the end of 2023 to the start of March, 37 out of 78 Industrial stocks in the index hit an all-time high. This was recorded as the highest percentage and number of stocks hitting an all-time high in any sector. Generally speaking during the same time around 130 stocks hit an all-time high in 2024. As per the report, the ongoing trends in the Technology sector have been the driving factor behind the rise. Specifically speaking, Information technology has gained the most during the year, rising more than 12.3% from the end of 2023 to March 2024.
READ ALSO: 10 Best Falling Stocks To Buy According to Hedge Funds and 8 Best Small-Cap Growth Stocks to Buy According to Analysts.
Fidelity Portfolio Manager Forrest St. Clair thinks that the surging growth within the industrial sector has been due to the trend of electrification across the United States. On October 14, he posted a note and mentioned that the industrial sector in the United States has improved over the past years, due to generous spending in the sector. Clair calls it a transformative force that is reshaping the industry and creating new investment opportunities. He mentioned that around $1 trillion has entered and will be entering the market via various acts including the Inflation Reduction Act and CHIPS and Science Act. He mentioned that while some of this investment has been utilized however most has been saved for future projects which thereby makes the outlook of certain industrial companies very positive.
While talking about the investment strategy to pick the best industrial stocks Clair pointed out to look for better-than-average companies which are trading below the average price and above average earnings per share growth. He further mentioned that electrification is not just a trend but rather is acting as a transformative force shaping the industry. He believes that companies that are investing in electric grids increasing electricity production for the country and developing electric vehicles will be well poised for growth and also benefit from the economic stimulus.
Moreover, Jason Weiner, Fidelity Portfolio Manager, also shares similar views. He mentioned that the recent federal laws have led to significant investments in the US economy, particularly benefiting industries focused on clean energy, manufacturing, and technology. Weiner highlighted that the CHIPS and Science Act aims to boost US semiconductor manufacturing by providing $52 billion in funding and tax incentives. The goal is to reduce reliance on foreign chip production, especially from countries like China. It also supports research and workforce development in technology sectors. He thinks that businesses involved in electric vehicles, semiconductors, and automation are likely to gain the most from these changes.
We have also covered 10 Oversold Tech Stocks To Buy Right Now recently. Here’s an excerpt from the article:
“In an interview with CNBC on September 30, Dave Sekera, Chief Market Strategist at Morningstar, shared his insights on the current state of the technology sector and the broader market. According to Sekera, the technology sector as a whole is “priced to perfection” and is trading at a 6% premium to fair value.
However, Sekera believes several technology stocks have run up too far trading at over 20% premium to fair value, whereas their sales have been sluggish. Sekera advises taking profits off the table for companies who are trading at a premium to fair value. Sekera’s team is also concerned that the market is overestimating the long-term growth potential of some companies due to artificial intelligence (AI), however, he believes that some of these companies will not benefit enough from AI to justify their current valuation. Sekera recommends four-star rated stocks that are trading at a discount to fair value and suggests swapping out overvalued companies and overextended AI stocks for these companies. Sekera also discussed the broader market, noting that growth stocks have outperformed value stocks for a while. However, he believes that it’s time to look at small-cap and mid-cap value-oriented names and believes that these types of value stocks are due for a rotation.
Sekera notes that the overall US market is currently trading at a 3% premium to fair value. He believes that this rotation into value stocks and small-cap stocks will be driven by the expectation of slowing economic growth in the US and the easing of monetary policy by the Federal Reserve. Historically, small-cap stocks have performed well in these conditions, and value stocks have been left behind in the frenzy to buy AI-related stocks. Sekera expects value stocks to catch up, and he believes that now is a good time to invest in these undervalued stocks.”
Our Methodology
To curate the list of the 8 best industrial stocks to buy according to analysts, we used the Finviz stock screener and CNN. We set the stock screener to show industrial stocks with target prices of 50% or more to compile an aggregated list. From the list, we cross-checked the analyst upside potential from CNN and ranked the stocks in ascending order of the analyst upside potential. We have also mentioned the number of hedge fund holders for each stock, as the Insider Monkey’s database of Q2 2024. Please note that the analyst upside potential was recorded on October 28th, 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A closeup of an employee’s hands attaching a barcode label to a shipping box.
Pitney Bowes Inc. (NYSE:PBI)
Number of Hedge Funds: 22
Analyst Upside Potential: 79.31%
Pitney Bowes Inc. (NYSE:PBI) is the 3rd best industrial stock to buy according to analysts. The company specializes in shipping and mailing services. The company allows its customers to send and receive packages effectively and also provides financial services to allow businesses to purchase mailing equipment.
The company reported strong financial results in its second-quarter results earnings call for fiscal 2024. It was able to grow its total revenue by 2% year-over-year to reach $793 million. Moreover, the company also generated an adjusted EBITD of $46 million indicating a 43% increase year-over-year.
Management of Pitney Bowes Inc. (NYSE:PBI) has been focused on its key segments including SendTech and Presort, which have the potential to grow in the future. As a strategic move, the company has completed its review of the Global e-commerce business and has decided to sell the majority interest in the business to Hilco Global. This move will eliminate ongoing losses associated with GEC.
Management remains confident that the strategic changes will lead to improved cash flow and earnings growth moving forward. They already generated $83 million in free cash flow in the second quarter of fiscal 2024, which is a substantial improvement of $94 million year-over-year.
Overall, PBI ranks 3rd on our list of best industrial stocks to buy according to analysts. While we acknowledge the potential of PBI to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.