The industrial sector has had a busy earnings week.
3M (NYSE: MMM) and Rockwell Automation (NYSE: ROK) reported Tuesday. Boeing (NYSE: BA) and General Electric (NYSE: GE) on Wednesday. UPS (NYSE: UPS) and Stanley Black & Decker (NYSE: SWK) Thursday. And Caterpillar (NYSE: CAT) caps of the week when it reports earnings tomorrow.
The biggest beat of the week was UPS, which gained just over 14% today after posting a 13% jump in revenue in its second quarter to $20.5 billion as the coronavirus pandemic accelerated online shopping trends, thus spurring demand for the shipper.
UPS managed to “crush elevated expectations on a surge in volume,” said JPMorgan analyst Brian Ossenbeck. “Parcel carriers have a unique opportunity to increase price given demand has never been higher for delivery services.”
But UPS aside, Gradient Investments’ Michael Binger has his eye on Raytheon (NYSE: RTX), which crushed earnings expectations on Tuesday.
Raytheon posted earnings per share of $0.40 on revenue of $14.3 billion—a 26% year-over-year jump—compared to analysts’ estimates for earnings per share of $0.13 on revenue of $13.5 billion.
“We think it’s a great value,” Binger said of Raytheon.
Binger also likes Catepillar, which he argues has solid exposure to the recovery in the infrastructure space.
“We think it’s an interesting name,” he said. “They have exposure to the global infrastructure recovery, and we think their earnings is going to bottom in the first half of 2021 and improve from there.”
“It’s worthwhile to highlight Rockwell Automation” in particular, Wald said. “It’s also outperform-rated at our firm. Why we like it based on the chart is that the stock is breaking through three-year resistance dating back to the 2017 so as much as it’s rising more recently, we still see runway for the stock after three years of little progress for the price.”
Wald isn’t the only one bullish on Rockwell Automation.
Citigroup analyst Andrew Kaplowitz upgraded Rockwell—which produces software and controllers for robots and process automation tech—from Hold to Buy this week, and boosted his price target on the stock from $223 to a Street high of $252 – nearly 15% higher than the price as of this writing.
Kaplowitz said Rockwell “is a leader in industrial automation, could be a major beneficiary of this secular trend given its product offerings in automation [and] factory productivity,” referring to the trend toward the use of robotics in manufacturing.