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Forbes Money Investing 5 Undervalued Predictable Industrial Stocks To Consider In October GuruFocus Contributor Opinions expressed by Forbes Contributors are their own. Following Oct 13, 2023, 03:41pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin These companies have predictable businesses while offering potential value Summary PGT Innovations, EMCOR Group EME , Lockheed Martin LMT , UPS and Snap-on SNA are trading at a discount. Market indexes were up on Wednesday morning following higher-than-expected inflation data and the announcement of Exxon Mobil Corp.’s ( XOM , Financial ) $59.5 billion merger with Pioneer Natural Resources PXD Co. ( PXD , Financial ). The producer price index recorded a 0.50% increase for September, which was greater than the 0.30% rise economists expected. However, it still represented a slowdown from the 0.70% increase in August. As such, the Dow Jones Industrial Average climbed 0.10%, putting it on track for its fourth consecutive day of gains. The S&P 500 rose less than 0.10% and the Nasdaq Composite gained 0.30%. Further, the overall industrials sector has gained about 6.71% year to date. Overview of performance by sector GuruFocus.com MORE FOR YOU Warren Buffett Revealed To Be Quietly Making Bank From Bitcoin And Crypto Amid Price Swings JPMorgan s Dimon Warns Of Most Dangerous Time In Decades Amid Huge Bank Earnings How Much Has The Cost Of Living Really Increased In 2023 As a result of these developments, investors may be interested in finding opportunities among undervalued industrial stocks that have predictable performances. The Undervalued Predictable Screener , a Premium GuruFocus feature, determines whether a stock is undervalued or overvalued based on two methods: discounted cash flow and discounted earnings. According to both methods, companies with a discount higher than zero are consider undervalued, while discounts below zero are considered overvalued. The companies’ predictability rates are then determined based on their historical performance over the past decade. The screener also looks for companies with predictability ranks of at least four out of five stars. Based on these criteria, a number of companies qualified for the screener as of Oct. 11, including PGT Innovations Inc. ( PGTI , Financial ), EMCOR Group Inc. ( EME , Financial ), Lockheed Martin Corp. ( LMT , Financial ), United Parcel Service Inc. ( UPS , Financial ) and Snap-on Inc. ( SNA , Financial ). PGT Innovations Shares of PGT Innovations ( PGTI , Financial ) are currently trading 49% below the DCF value of $62 and 19% below the discounted earnings value of $39. The Venice, Florida-based company, which manufactures a variety of window and door products, has a $1.80 billion market cap; its shares were trading around $31.24 on Wednesday with a price-earnings ratio of 17.85, a price-book ratio of 2.81 and a price-sales ratio of 1.06. The GF Value Line VALU suggests the stock is fairly valued currently based on its historical ratios, past financial performance and analysts’ future earnings projections. PGT Innovations' GF Value Line GuruFocus.com At 95 out of 100, the GF Score indicates the company has high outperformance potential. While it received solid ratings for profitability, growth and momentum, the financial strength and value ranks are more moderate. PGT Innovations' GF Score GuruFocus.com PGT Innovations also has a four-star predictability rank . According to GuruFocus research, companies with this rank return an average of 9.80% annually over a 10-year period. EMCOR Group EMCOR Group ( EME , Financial ) shares are trading 40% below the DCF value of $348, but 10% above the discounted earnings value of $189. The company headquartered in Norwalk, Connecticut, which provides electrical and mechanical construction and facilities services, has a market cap of $9.87 billion; its shares traded around $207.91 on Wednesday with a price-earnings ratio of 20.71, a price-book ratio of 4.64 and a price-sales ratio of 0.85. According to the GF Value Line , the stock is modestly overvalued currently. EMCOR's GF Value Line GuruFocus.com On the back of solid ratings for growth, profitability and financial strength, a moderate momentum rank and low value rank, the company’s GF Score is 85. As such, EMCOR has good outperformance potential. EMCOR's GF Score GuruFocus.com The company also has a 4.5-star predictability rank. GuruFocus says companies with this rank return an average of 10.60% annually. Lockheed Martin Lockheed Martin ( LMT , Financial ) is trading 34% below the DCF value of $666 and 16% below the discounted earnings value of $521. The Bethesda, Maryland-based aerospace and defense company, which produces high-end fighter jets and other weapons and aircraft, has a $110.71 billion market cap; its shares were trading around $436.71 on Wednesday with a price-earnings ratio of 15.97, a price-book ratio of 11.86 and a price-sales ratio of 1.68. Based on the GF Value Line , the stock appears to be fairly valued currently. Lockheed Martin's GF Value Line GuruFocus.com The GF Score of 88 implies the company has good outperformance potential, driven by high growth and profitability ratings and more moderate value, momentum and financial strength ranks. Lockheed Martin's GF Score GuruFocus.com Lockheed Martin also has a four-star predictability rank. United Parcel Service Shares of United Parcel Service ( UPS , Financial ) are trading 31% below the DCF value of $224 and 44% below the discounted earnings value of $277. Headquartered in Atlanta, the shipping and supply chain management company has a market cap of $132.39 billion; its shares traded around $155.05 on Wednesday with a price-earnings ratio of 13.45, a price-book ratio of 6.62 and a price-sales ratio of 1.40. The GF Value Line suggests the stock is modestly undervalued currently. UPS's GF Value Line GuruFocus.com The GF Score of 94 means UPS has high outperformance potential due to high ratings for four of the criteria as well as a more moderate momentum rank. UPS's GF Score GuruFocus.com UPS has a four-star predictability rank. Snap-on Snap-on’s ( SNA , Financial ) stock is trading 13% below its DCF Value of $301 and 19% below its discounted earnings value of $321. The Kenosha, Wisconsin-based company, which manufactures tools for the automotive, aviation, aerospace, collision, construction and agriculture markets, has a $13.83 billion market cap; its shares were trading around $260.97 on Wednesday with a price-earnings ratio of 14.46, a price-book ratio of 2.90 and a price-sales ratio of 3.07. According to the GF Value Line , the stock is currently fairly valued. Snap-on's GF Value Line GuruFocus.com The company has good outperformance potential with a GF Score of 90 due to solid ratings for four of the criteria and a low value rank. Snap-on's GF Score GuruFocus.com The company is also supported by a five-star predictability rank. GuruFocus found companies with this rank return an average of 12.10% annually. Additional opportunities Other companies that qualified for the screener were Union Pacific UNP Corp. ( UNP , Financial ), Canadian National Railway Co. ( CNI , Financial ), Cintas CTAS Corp. ( CTAS , Financial ), FedEx FDX Corp. ( FDX , Financial ), Copart CPRT Inc. ( CPRT , Financial ), Old Dominion Freight Line ODFL Inc. ( ODFL , Financial ) and United Rentals URI Inc. ( URI , Financial ). Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Follow me on Twitter . GuruFocus Editorial Standards Print Reprints & Permissions
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