Atkore (ATKR) is one of the best GARP stocks on the market as it has a P/E of 4 and has increased its earnings by nearly 4 times over the past 2 years. Read on to find out why investors should take advantage of the recent drop in stock prices.
2022 was the most challenging year for investors since 2008. The biggest uncertainty is whether the Fed will manage to cut inflation without sending the economy into recession.
So far, the economy and inflation have proven to be more resilient to the effects of higher rates, while financial assets have proved much more sensitive. So we see weakness in equities and commodities in anticipation of a recession, even though there is no recession yet. This also means that we are seeing major oversold bounces and rallies in precipitated cyclical stocks.
Within the sector, there are some interesting names that trade at attractive valuations and would outperform even in a recession. Today’s Featured Stock – Atkore (ATKR) – should be on investors’ radar as it is one of the high-quality industrial stocks.
Read on to find out why ATKR is our recommended stock…
Business background
ATKR is one of the major industrial suppliers in the US. It manufactures and markets industrial components and products such as electrical conduits, metal frames, modular support and mechanical conduits.
Throughout its history, the company has grown organically and through acquisitions and has become something of a conglomerate. The company has thrived in recent years as a result of increased spending on infrastructure, construction and CAPEX. It also benefits from inflation, as it has pricing power because the products are essential to projects but make up a small part of the total cost.
GARP
As an industrial stock, ATKR would definitely fall and underperform if we hit a recession. So far, it should be noted that the sector has managed to avoid a recession. More importantly, there has been no erosion in terms of ATKR’s earnings.
Over the past 12 months, it has earned $19.40 per share, giving it a very attractive P/E of 4.6. The stock is down about 35% from its all-time high a few months ago. Another noteworthy development is that the stock has remained virtually stable for the past 16 months, despite an increase in earnings of about 60%.
The company has also benefited from margin expansion across all of its major units, indicating its ability to capitalize on inflation and demand remains strong.
Ultimately, the stock is already pricing in some weakness in the industrial sector and could pull more downward if the outlook worsens. However, it is clearly one of the best industrial stocks and could outperform if the economy proves to be more resilient than expected.
POWR ratings
The POWR ratings rate ATKR a B which is equivalent to a buy. B-rated stocks have posted an average annual performance of 21.1%, which compares favorably with the S&P 500’s 8% annual performance.
In terms of component grades, it’s not surprising that ATKR has a B for growth and value, given its double-digit revenue and revenue growth alongside a low P/E. It also has an A for quality due to its strong balance sheet and capable management team. Click here to see ATKR’s full POWR ratings.
What makes them”MUST OWN“?
All 9 picks have strong fundamentals and experience tremendous momentum. They also contain a winning mix of growth and value attributes that are a catalyst for serious outperformance.
More importantly, they have all recently earned a Buy rating from our coveted POWR Ratings system, with A-rated stocks rising +31.10% per year.
Click below now to check out these top-performing stocks with exciting growth prospects:
ATKR shares were unchanged in premarket trading on Thursday. Year-to-date, ATKR is down -15.14%, versus the benchmark S&P 500 index’s gain of -20.32% over the same period.
About the author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR growth and POWR Shares Below $10 newsletters. Read more about Jaimini’s background, along with links to his most recent articles.
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