Kalkine Media lists 5 industrial stocks to explore in Q4

The industrial sector seems to be on investors' radar at the beginning of the fourth quarter of 2022, as evidenced by the upward momentum in the segment. The S&P 500 industrial sector added over six per cent through October 6, 2022.

The economic slowdown has also raised concerns over a potential recession, weighing on the sentiments of market participants. 

As the industrial segment is considered the backbone of the economy, invariably its performance is closely tied to the overall health of the economy. Northrop Grumman Corporation (NYSE: NOC), Huntington Ingalls Industries, Inc. (NYSE: HII), Quanta Services, Inc. (NYSE: PWR), Lockheed Martin Corporation (NYSE: LMT), and General Dynamics Corporation (NYSE: GD) are some of the popular entities in the industrial sector, that has gained notable traction lately.

Meanwhile, the bearish sentiment in the market due to the rising costs and higher policy rates has also hurt investors’ confidence, spurring fears of an economic slowdown.

Let's explore the stock performance and financial highlights of the industrial stocks amid turbulence in the market with Kalkine Media®:

Northrop Grumman Corporation (NYSE: NOC)

The leading aerospace and defense technology company had a P/E ratio of 13.65. The leading weapon manufacturer and technology solution provider in the military sector holds a dividend yield of 1.42 per cent.

The stock price of the US$ 74.94 billion market cap company added about 25 per cent YTD while rising around 30 per cent year-over-year (YoY). In the latest quarter, it slipped by about two per cent. The stock of the aerospace company touched its 52-week high of US$ 515.4899 on September 21, 2022.

Northrop Grumman’s sales were US$ 8.80 billion in Q2 FY22, down from US$ 9.15 billion in Q2 FY21. The aerospace and defense company's net income was US$ 946 million in the latest quarter, compared to US$ 1.03 billion in Q2 FY21.

Huntington Ingalls Industries, Inc. (NYSE: HII)

Huntington is one of the leading military shipbuilding firms with a dividend yield of 2.08 per cent. The US-based shipbuilding company provides its services to several clients in the industries including the government.

The price of the HII stock appears to be in a stable position this year, showing gains of over 19 per cent YTD. On an annual basis, the stock rose about 15 per cent, while jumping about two per cent in the third quarter. In addition to that, the stock price of the shipbuilding company touched its 52-week high of US$ 243.46 on August 26 this year.

The US$ 9.30 billion market cap company's revenue rose 19.3 per cent YoY to US$ 2.7 billion in Q2 FY22, while its diluted EPS was US$ 4.44 apiece, up from US$ 3.20 per share in Q2 FY21.

Quanta Services, Inc. (NYSE: PWR)

The construction engineering company, Quanta Services, had a dividend yield of 0.21 per cent. The infrastructure provider for electric power, pipeline, and other related sectors had a P/E ratio of 43.69.

The stock price of the US$ 21.19 billion market cap firm was up around 12 per cent this year while adding over 13 per cent YoY. In the latest quarter, its price was up about three per cent.

The Houston, Texas-based industrial company's revenue was US$ 4.23 billion in Q2 FY22, up from US$ 3 billion in Q2 FY21. Quanta Services' net income was US$ 88 million in Q2 FY22, down from US$ 117 million in the year-ago period.

For fiscal 2022, which would end on December 31, 2022, Quanta expects its revenue to be between US$ 16.6 billion and US$ 17 billion, the company said during its second-quarter earnings release. Meanwhile, Quanta now expects its annual net income to be between US$ 491 million and US$ 541 million.

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Lockheed Martin Corporation (NYSE: LMT)

Lockheed Martin is another leading aerospace and defense firm with a dividend yield of 2.76 per cent. The stock price of the company surged about 13 per cent YTD while jumping over 15 per cent YoY. In the last five days, the price of LMT stock rose below one per cent through October 6.

Meanwhile, the aerospace and defense firm declared a Q4 FY22 dividend of US$ 3.00 apiece, an increase of US$ 0.20 per share from the last quarter, which would be payable on December 30 this year.

In Q2 FY22, Lockheed Martin's net sales were US$ 15.4 billion, compared to US$ 17.02 billion in the year-ago quarter. The net income of the company, which engages in arms, aerospace, information security, and other related industries, totaled US$ 309 million in its latest quarter versus US$ 1.8 billion in Q2 FY21.

General Dynamics Corporation (NYSE: GD)

General Dynamics is an aerospace and defense company with a dividend yield of 2.2 per cent. The company's stock is one of the top gainers in the S&P 500 industrial sector this year so far, showing gains of over eight per cent.

On a YoY basis, the stock price of the US$ 59.81 billion market cap company added over 14 per cent while soaring more than two per cent the in the last five days. The P/E ratio of GD stock was 19.21.

General Dynamics posted a net income of US$ 766 million on revenue of US$ 9.2 billion in Q2 FY22. Its diluted EPS rose 5.4 per cent YoY to US$ 2.75 per share. Its Q2 FY22 revenue declined 0.3 per cent YoY while its net earnings rose 3.9 per cent YoY.

Bottom line:

The Federal Reserve still seems committed to tightening the monetary support to fight increasing costs. The latest push of the central bank was noticed at the conclusion of the Fed’s September meeting when they announced another jumbo hike of 0.75 points.

In addition to that, the policymakers indicated that they would back more increases in the policy rates in the coming months to curb inflation, even if it triggers a recession.

The Federal Reserve signaled that they would continue with their aggressive plans through next year as well, dashing hopes of investors that the central bank may start cutting the rates by next year.

So, investors should keep a close watch on the path they are walking before putting their bets on any asset amid the highly volatile condition along with the bearish sentiment in the market.

Notably, the S&P 500 industrial sector noted a slump of nearly 12 per cent YoY, while falling about 17 per cent this year. In the third quarter, it traded flat.