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.
[in-text-ad]

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.

Energizer

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%).

GE

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%).

L3Harris

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.

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.
[in-text-ad]

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.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.