U.S. Manufacturing is showing steady, if not spectacular growth recently. Here are two industrials with reasonable valuations that will be able to continue to produce consistent returns in this environment:
TE Connectivity TEL - "TE Connectivity Ltd. engages in the design and manufacture of products that connect and protect the flow of power and data inside various products used by consumers and industries. It offers connector systems and components, relays, circuit protection devices, wire and cable products, heat shrink tubing, sensors, application tooling, touch screens, antennas, racks and panels, fiber optics, wireless products, and custom-engineered solutions". (Business description from Yahoo Finance)
4 reasons TEL has value at $34 a share:
- Credit Suisse has an "outperform" rating and a $41 price target on TEL. KeyBanc Capital Markets initiated the stock to a "buy" in December.
- The stock has a five year projected PEG of under 1 (.92) and provides a solid 2.3% dividend yield.
- The forward PE on TEL is just over 9 which is a 40% discount to its five year average.
- TEL is showing consistently growing EPS growth. It made $2.82 in FY2011, is projected to make $3.27 in FY2012 and analysts expect $3.77 in FY2013.
SPX Corporation SPW - "SPX Corporation provides flow technology products, test and measurement products, thermal equipment and services, and industrial products and services worldwide". (Business description from Yahoo Finance)
4 reasons SPW has value at $65 a share:
- SPW is showing rapid EPS growth. SPX Corporation earned $3.62 in FY2010, is expected to make $4.42 in FY2011 and analysts project $5.25 in FY2012.
- Credit Suisse has an "outperform" rating and a $81 price target on the stock. S&P also has a "buy" rating and a $80 target on SPW.
- The stock has a five year projected PEG of under 1 (.95) and sells for just 10 times operating cash flow.
- It has a rapidly growing presence and revenues from China to help diversify its North American cash flows.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SPW over the next 72 hours.