Key Points
- Digitization across industries has driven a surge in demand for companies specializing in technological infrastructure.
- Rockwell Automation has beaten sales and net income views, with double-digit earnings growth in the past four quarters.
- Vertiv Holdings' share price surged 15.24% on May 25.
- Powell Industries has shown remarkable stock growth, with impressive earnings and a dividend yield of 1.80%.
- 5 stocks we like better than Rockwell Automation
It’s been a stock picker’s market lately. Indexes have been moving sideways and having trouble gaining sustained upside traction, yet there are numerous stocks not named Nvidia Corp. NASDAQ: NVDA that are rallying to new highs.
Recently some of those stocks include names from the unheralded industry of electrical equipment makers. Believe it or not, this little unglamorous corner of the market is home to several top performers.
In markets without a breadth of leadership, investors often have to dig deeper for names they’re not familiar with, but which have a combination of fundamentals, such as sales and earnings growth, good chart action, and favorable business or economic conditions driving growth.
As digitization across all industries is on the rise, it shouldn’t be surprising that companies that make and service system innards are seeing a boom in business.
Here’s a look at three of those companies.
Rockwell makes hardware and software to assist with industrial automation and the transition to digital systems. The stock pulled back from a 52-week high in March, but is still up 38.70% on a one-year basis as it forms a flat base.
Rockwell Automation earnings data show the company beating sales and net income views in the past three quarters. In the past four quarters, earnings grew at double-digit rates.
Wall Street is eyeing earnings growth of 26% this year.
Of course, Rockwell Automation’s AI initiatives are part of the service offering.
Rockwell is a large cap, with a market capitalization of $31.41 billion. At that size, the Milwaukee-based company is part of the S&P 500. Membership in one of the world’s most important stock indexes essentially ensures demand as institutions periodically rebalance portfolios to track the components and their weightings.
The stock is forming a very orderly consolidation and is one to watch, as it regains upside momentum to surpass a buy point north of $309.36.
You won’t hear much about it, because the stock is mid-cap and its primary business is not AI, but the Vertiv chart shows you a stock that gapped up 15.24% in monster volume on May 25.
There was no specific news, but a large buyer was ponying up for shares, an indication of confidence in the stock at a higher valuation.
As its name indicates, Vertiv is structured as a holding company for various subsidiaries. Its listing is the result of a special purpose acquisition company (SPAC) merger that was completed in February 2020.
The company pays a small dividend, but its regulatory filings emphasize that because it’s a holding company and has no direct operations, any dividend is at the discretion of its subsidiaries.
Vertiv, through its subsidiaries, designs, builds, and services infrastructure systems for data centers. The company also offers installation, maintenance, and monitoring services.
Vertiv earnings grew at double-digit rates in the past four quarters, while earnings growth has accelerated quickly in the past three.
This is a high beta stock, so it's more volatile than the broader market. Vertiv dividend data
Powell Industries specializes in electrical power distribution and control systems for a wide range of industries, including oil and gas and transportation.
The Powell Industries chart shows the stock has been on an absolute tear, advancing 46.05% in the past month, 34.15% in the past three months, and 66.93% year-to-date.
Powell stock gapped up 21.72% on May 3, after reporting second-quarter earnings of $0.70 per share, up from the year-ago quarter’s loss of $0.10 a share. Revenue grew 34% to $171.4 million. This is truly a fast-growth company, with earnings increasing by 600% in 2022. That’s seen rising another 506% this year.
This is a very small company, with a market capitalization of just $691.3 million, and a small number of shares in float. For that reason, it may be difficult for investors to buy or sell at exactly the price they want.
However, there’s an attractive feature to balance that out: Powell dividend data shows a yield of 1.80%. It’s unusual for small caps to pay dividends; the fast growth plus dividend make this stock a watch list candidate. It’s currently extended from a buy point, but watch for the stock to pull back with moving average support; that may offer a new chance to get in.
Before you consider Rockwell Automation, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Rockwell Automation wasn't on the list.
While Rockwell Automation currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Just getting into the stock market? These 10 simple stocks can help beginning investors build long-term wealth without knowing options, technicals, or other advanced strategies.
Get This Free Report
