We came across a bullish thesis on ABM Industries Incorporated (ABM) on Substack by Stock Analysis Compilation. In this article, we will summarize the bulls’ thesis on ABM. ABM Industries Incorporated (ABM)’s share was trading at $55.58 as of Nov 20th. ABM’s trailing and forward P/E were 22.97 and 15.55 respectively according to Yahoo Finance.
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ABM Industries, primarily known for its janitorial services, operates in a straightforward but essential sector, catering to schools, businesses, and airports. In addition to janitorial services, ABM provides parking lot maintenance, facility engineering, and airport logistics, including passenger assistance and catering. Despite its unassuming nature, ABM has consistently grown its revenue at about 4% annually since 2019, aligning closely with GDP growth. At a valuation of roughly 14 times earnings, the company represents a steady, recession-resilient investment, particularly evident from its stable performance in challenging markets like airports.
Two growth catalysts could enhance ABM’s long-term prospects. First, its business and industry division faces challenges, but a potential normalization could provide a meaningful revenue tailwind. Second, ABM is expanding into the microgrid and electric vehicle power station installation sector, which offers high growth potential. While this “project” business accounts for only 25% of total revenue, it has grown at a robust 9.4% annual rate since 2019, outpacing the company’s traditional segments. This dual dynamic of a stable core business and an emerging growth engine creates a compelling narrative. Should the project business continue its trajectory, it could transform ABM’s overall growth profile, offering investors an attractive balance of stability and upside potential.
ABM Industries Incorporated (ABM) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held ABM at the end of the third quarter which was 21 in the previous quarter. While we acknowledge the risk and potential of ABM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ABM but 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 was originally published at Insider Monkey.