NOC to LMT: Top 5 industrial stocks to watch amid recession fear

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Highlights:

  • Northrop Grumman Corporation (NYSE: NOC) was selected by the Missile Defense Agency (MDA) for leading the Homeland Missile Defense Program.
  • Quanta Services, Inc. (NYSE: PWR) Q1 FY22 revenue was US$ 3.96 billion.
  • Nielsen N.V. (NYSE: NLSN) revenue soared over two per cent in Q2 2022.

Northrop Grumman (NYSE: NOC), Lockheed Martin (NYSE: LMT), L3Harris  (NYSE: LHX), and Raytheon Technologies (NYSE: RTX) are among the top players in the industrial sector.

The industrial sector comprises firms that produce machinery, equipment, and other related products utilized in the construction and manufacturing segments. 

The sector is known to move in tandem with the health of the economy, and its business volume generally witnesses a sharp decline during a recession period. Now, given the looming fears of recession, investors seem to be keeping a close watch on the performance of the industry.

Now, let's explore some of the top industrial stocks that have managed to maintain a steady momentum despite a decline in the broader market.

Northrop Grumman Corporation (NYSE: NOC)

The aerospace and defence firm had a dividend yield of 1.44 per cent, and its annualized dividend is US$ 6.92. The dividend yield is the annual income received from an investment (dividend) divided by the asset's current price.

The US$ 74.05 billion market cap company is recently been selected by the Missile Defense Agency (MDA) for leading the Homeland Missile Defense Program. It posted total sales of US$ 8.80 billion in Q2 FY22, down by four per cent from US$ 9.15 billion in the year-ago quarter.

The Falls Church, Virginia-based firm reported net earnings of US$ 946 million in the fiscal 2022 second quarter, a nine per cent decline from US$ 1.03 billion in Q2 FY21. Its diluted earnings per share (EPS) was US$ 6.06 apiece in Q2 FY22, versus US$ 6.42 per share in the fiscal 2021 second quarter.

LMT stock showed gains of about 22 per cent year-to-date (YTD) while increasing nearly 30 per cent in the last 12 months.

Quanta Services, Inc. (NYSE: PWR)

The US$ 19.91 billion market cap company holds a dividend yield of 0.2 per cent, while its annualized dividend was US$ 0.28. 

Quanta Services posted a revenue of US$ 4.23 billion in Q2 FY22, up from US$ 2.99 billion in the year-ago period. Its net income was US$96.16 million, or US$ 0.59 per diluted share in the latest quarter, comparatively down from US$ 118.97 million, or US$ 0.81 per diluted share in Q2 FY21.

QNT stock rose around 20 per cent YTD while soaring over 51 per cent year-over-year (YoY).

Leidos Holdings, Inc. (NYSE: LDOS)

The stock of the engineering company soared about 18 per cent this year. However, it traded flat on an annual basis. The dividend yield of LDOS was 1.35 per cent, and its annualized dividend was US$ 1.44.

The board of directors of the Reston, Virginia-based firm declared a quarterly cash dividend of US$ 0.36 per outstanding share of its common stock (payable on September 30, 2022) on July 29.

Leidos said that it has entered into a definitive agreement with Cobham Limited, under which it would acquire Cobham Aviation Services Australia's Special Mission business.

In the fiscal 2022 second quarter, the company's revenue witnessed a four per cent growth in its revenue of US$ 3.6 billion. Its net income rose to US$ 172 million, or US$ 1.24 per diluted share, in Q2 FY22, from US$ 170 million, or US$ 1.18 per diluted share in the comparable quarter of the prior year.

At the time of drafting, the Relative Strength Index (RSI) of LDOS was about 61. RSI between 50 and 70 suggests that the stock is in a neutral state.

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Nielsen N.V. (NYSE: NLSN)

Nielson holds a market cap of US$ 8.62 billion, and its dividend yield was one per cent. Its annualized dividend is US$ 0.24.

The data and market measurement firm posted a 2.4 per cent surge in its second quarter fiscal 2022 revenue of US$ 882 million. Its net income attributable to common shareholders was US$ 111 million, or US$ 0.31 per share, in Q2 FY22, up from US$ 76 million, or US$ 0.21 per diluted share in Q2 FY21.

Nielson Board of Directors announced a quarterly dividend of US$ 0.06 per share on its common stock on July 14 (payable on September 2).

NLSN stock grew about 16 per cent YTD while increasing around one per cent YoY.

Lockheed Martin Corporation (NYSE: LMT)

LMT stock gained nearly 18 per cent this year while soaring around 12 per cent YoY. The aerospace and defence firm had an RSI of about 56.

The US$ 111.15 billion market cap company had a dividend yield of 2.71 per cent, and its annualized dividend was US$ 11.20.

Lockheed Martin posted net sales of US$ 15.4 billion in Q2 FY22, down from US$ 17.00 billion in the prior year's second quarter. Its earnings for the second quarter of fiscal 2022 were US$ 309 million, or US$ 1.16 per share, relatively less than US$ 1.8 billion, or US$ 6.52 per share in Q2 FY21.

The Bethesda, Maryland-based firm expects its net sales to be about US$ 65.25 billion for fiscal 2022. In addition, it provided guidance of US$ 21.55 apiece for its diluted earnings per share in the ongoing year.

Bottom line

The US GDP shrank for the second straight quarter, the Commerce Department reported last week. US GDP retreated 0.9 per cent annually in Q2 after declining 1.6 per cent in the first quarter of this year.

The cooling economy seems to have had an impact on the overall sector's performance, as seen by its decline in recent months. The S&P 500 Industrial sector fell at a rate of about nine per cent this year while declining over seven per cent in the last 12 months.


 


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