Three environmentally friendly industrial stocks to buy for war or peace are seeking to give birth to breakthroughs that will position them for bright futures.
The three environmentally friendly industrial stocks to buy are pursuing goals such as increasing agricultural productivity, manufacturing electric-powered farming equipment and recycling fibers to produce packaging. As social consciousness aimed at protecting the environment gains support amid growing concerns about climate change, companies that provide solutions should gain staying power.
High inflation, continuing Fed rate hikes, risk of recession and Russia’s ruthless shelling of civilian targets in Ukraine this week to intensify attacks on the neighboring nation it invaded on Feb. 26 are sources of uncertainty, but none will change environmental awareness momentum. Russian’s onslaught against Ukraine is still raging, disrupting the world economy, and Europe and Asia are mired in recession, wrote Mark Skousen, a presidential fellow in economics at Chapman University, in his monthly Forecasts & Strategies investment newsletter.
“The primary negative, of course, is that the Federal Reserve is determined to slow the economy, reduce demand, and thereby bring down inflation,” Skousen opined.
Three Environmentally Friendly Industrial Stocks to Buy Face the Fed
But too much quantitative tightening, too fast, may push the United States into a recession, continued Skousen, who uses his analysis of inflation, interest rates and monetary policy in recommending stocks and options to buy in his weekly Home Run Trader advisory service. Economic statistics are showing a slowdown in the economy, but not an actual recession thus far, he added.
“Even though real gross domestic product (GDP) is slightly negative, second-quarter gross output (GO) — which measures total spending in the economy — grew by 1.7% in real terms,” Skousen stated. “GO includes the supply chain, which is still catching up from the lockdown-induced shortages.”
Mark Skousen, Forecasts & Strategies chief and Ben Franklin scion, meets Paul Dykewicz.
Three Environmentally Friendly Industrial Stocks to Buy Despite Russia’s Invasion
A big question is whether Russia’s President Vladimir Putin will persist in attacking Ukraine and its civilians, in addition to military and industrial targets. On Monday, Oct. 10, Putin-led forces unleashed terror on more than 20 cities across Ukraine with at least 84 cruise missiles and 24 drones, marking one of Russia’s largest assaults against civilians since starting what its leaders call a “special military operation.” The strikes killed at least 14 civilians and wounded dozens of others.
Russia’s shelling of hospitals, schools, residential areas, churches, nuclear power plants, oil refineries, a children’s playground, a park, a German consulate, a business center and a theater used as a shelter have been combined with brutal rapes, torture and outright executions of Ukrainian civilians. Those acts caused many nations to place sanctions on Russia that included scaling back or severing ties with the aggressor as a producer of grain, oil and natural gas.
Investors can consider a fairly new exchange-traded fund that offers broad exposure to companies providing automation infrastructure, if not environmental awareness, said Bob Carlson, a pension fund manager who also leads the Retirement Watch investment newsletter. The fund is Gabelli Automation (GAST), which has been available only since Jan. 5, 2022.
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GAST owns only 38 stocks, and 41% of the fund is in the 10 largest positions. About 50% of the fund is in industrial companies and 24% in technology firms.
The fund is down 8.78% in the last month. GAST invests primarily in stocks listed on U.S. exchanges and looks for stocks management believes are underpriced.
Bob Carlson, investment guru of Retirement Watch, talks to Paul Dykewicz.
Three Environmentally Friendly Industrial Stocks to Buy Include AGCO
AGCO Corporation (NYSE: AGCO), an agricultural machinery manufacturer in Duluth, Georgia, is delivering a 20% increase in both farmers’ productivity and profitability, according to Chicago-based investment firm William Blair & Co. Thus, AGCO’s precision products generally offer a two-year payback, and in some cases, a one-year payback, the firm added.
Some of AGCO’s innovation efforts focus on real-time “sense and react” in the field across an entire crop cycle, the investment firm wrote. The use of “edge processing” and “advanced sensors” will help maximize outcomes by enhancing productivity and sustainability for its customers, William Blair added.
AGCO, rated “outperform” by William Blair, intends for Fendt to be its premium brand in both North and South America, requiring a strong precision agricultural portfolio, a diverse array of solutions that work across the entire crop cycle and robust distribution and after-sales support, according to William Blair. Fent sales are expected to be $700 million in 2022, and then more than double to $1.5 billion in three to five years, with an additional goal to achieve 20% market share in North America.
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The company brings its newest equipment to the market, while the aftersales approach adds the latest technology to an existing piece of AGCO equipment. As for retrofit, the company sells advanced, agronomic solutions to farmers who want to update existing pieces of equipment with modern technology economically.
Former Money Manager Connell Also Advocates for AGCO
Michelle Connell heads Portia Capital Management, of Dallas, Texas.
Most analysts have AGCO rated to achieve upside of 30-35% in 12-18 months, Connell counseled. When AGCO reported results in July, the company beat its revenue and earnings per share estimates. However, it left its estimates for the second half of 2022 at the same levels.
Plus, the company continues to experience strong demand, with a potent order book into 2023, Connell said. Typically, at this time of year, the company does not have that strong of an order base, she added.
Unless some external factors come into play, AGCO should experience strong financials for the end of the year, as well as next year, Connell continued. Possible risks include economic exposure to the European Union (EU), as well as China, along with supply chain uncertainties. In addition, manufacturing in Europe could be affected by an upcoming energy crisis for the region this winter. However, AGCO is expected to have enough alternative energy sources in the EU to remain largely protected. Finally, the company’s stock performance has been tied to economic cycles in the past.
AGCO benefits as the population of the world increases, since it needs to grow quality food in a world of declining acreage. Companies that manufacture equipment that maximize a farm’s acreage will continue to experience high demand, Connell concluded.
Deere Jumps Among Three Environmentally Friendly Industrial Stocks to Buy
Deere & Co. (NYSE: DE), an environmentally oriented agricultural machinery company headquartered Moline, Illinois, halted its dividend during the pandemic but reinstituted it with a current dividend yield of 1.27%. Additional evidence of the company’s conservatism is a payout ratio of just 20% to retain cash on hand.
Deere, rated “outperform” by William Blair, also has done an “excellent job” supporting its stock price, Connell said. In the last 10 years, the company has repurchased 25% of its shares outstanding, she added.
The company is known for buying shares when valuations are low and using its cash for such purchases, Connell continued. There have been some concerns regarding Deere’s insider sales of approximately $4 million in 2022 but Connell said she is not worried.
“Executives frequently have tight windows for the sales of their shares and estate planning may also be part of the executives’ strategy,” Connell told me. “I like DE because it takes advantage of the fact that that as a population increases, the demand for affordable food increases as well.”
Deere has done a “great job” of utilizing technology with its machinery to maximize crop yield, Connell said. While the stock has held up well in a falling market, potential upside for the next 12 to 18 months could top 20%.
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Deal for Kreisel Keeps Deere Prancing with Three Environmentally Friendly Industrial Stocks to Buy
Deere & Company signed a definitive agreement to acquire majority ownership last December in Kreisel Electric, Inc., a battery technology provider based in Rainbach im Mühlkreis, Austria. Kreisel develops high-density, high-durability electric battery modules and packs. Plus, Kreisel developed a charging infrastructure platform that uses patented battery technology.
Since 2014, Kreisel has focused on the development of immersion-cooled electric battery modules and packs for high-performance and off-highway applications. Kreisel has a differentiated battery technology and battery-buffered charging infrastructure to serve a global customer base across multiple end markets, including commercial vehicles, off-highway vehicles, marine, e-motorsports and other high-performance applications.
Deere sees demand growing for batteries as a sole- or hybrid-propulsion system for off-highway vehicles. Products such as turf equipment, compact utility tractors, small tractors, compact construction and some road building equipment could rely solely on batteries as a primary power source. Deere intends to continue to invest in and develop technologies to innovate, deliver value to customers and work towards a future with zero emissions propulsion systems.
A majority investment in Kreisel Electric will allow Deere to optimally integrate vehicle and powertrain designs around high-density battery packs while leveraging Kreisel’s charging technology to build out infrastructure required for customer adoption.
Kreisel’s battery technology can be applied across the broad portfolio of Deere products to ramp up the latter company’s battery-electric vehicle portfolio. Deere will provide the global footprint and funding to enable Kreisel to continue its fast growth in core markets, said Pierre Guyot, senior vice president of John Deere Power Systems.
Kadant Canters Among Three Environmentally Friendly Industrial Stocks to Buy
Kadant Inc. (NYSE: KAI), a Westford, Massachusetts-based global supplier of technologies and engineered systems, offers sustainable industrial processing engineering services and technologies to help its customers create more value with fewer inputs. On the horizon is a totally new recycling market for Kadant Inc.’s fiber recycling business. Indeed, fiber-based packaging for beverages and food for consumer goods have undergone extensive trials in Europe and the United States.
In 2023, two private European (Paboco and Pulpex) and one North American (Footprint) fiber-based consumer packaging companies are expected to materially accelerate the commercialization of environmentally friendly fiber-based packaging, according to William Blair. As adoption of fiber-based food and beverage packaging becomes more widespread, it will create an entirely new market for Kadant’s IP business, the investment firm wrote in a recent research note.
“Full-scale global conversion to fiber and cellulose-based packaging will take several years to become mainstream but the estimated $315 billion market for fiber to replace plastic for food and beverage packaging will create an entirely new segment for the worldwide fiber recycling market, in which Kadant holds 60-70% global market share, according to William Blair. Kadant is benefiting from three capital expansion cycles for its core businesses: a modernization cycle for sawmills for Industrial Processing (IP); a conveyance refurbishment and expansion cycle for aggregates, ore and agricultural producers at Material Handling (MH); and a new emerging market that expands fiber recycling as cellulose and fiber packaging to replace plastic containers for Flow Control (FC).
“To meet rising demand across all its end-markets, Kadant is expanding capacity in India, Finland, Mexico and Ohio, while the government in China is building Kadant a new modernized replacement plan,” William Blair wrote. “Kadant is also improving its supply chain resilience by near-shoring capacity closer to some of its largest markets such as North America and Europe. Given the company’s strong recurring revenue from parts and consumables sales –approximately 65% of sales — management noted that it would anticipate a 5% to 10% decline in parts and consumable sales in a recession, with potentially 10% to 20% lower capital equipment sales, skewed to large projects.”
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The Russian invasion of Ukraine has shifted where fertilizer and grains are being transported around the world, with incremental demand now coming from the EU to increase capacity for material handling equipment to replace Russian exports of grain, wood, mineral and more, William Blair wrote. Valuations for food production equipment businesses are elevated due to their stability but Kadant expects moderation due to increased interest rates. Expanding Kadant’s industrial business market reach and geographic penetration could further help it to leverage a capital spending renaissance that could extend until late this decade.
Three Environmentally Friendly Industrial Stocks to Buy Should Be Aided by New Bivalent Booster
Experts at Dartmouth Health recommend that everyone eligible for a new bivalent COVID-19 booster receive it to gain increased protection against the omicron BA.5 variant, which has become the predominant strain in the United States. As a resident of Maryland, I personally received a phone call from the state’s health department on Tuesday, Oct. 11, to advise me of the booster’s availability at pharmacies close to my home.
Even though COVID cases and deaths can hurt supply and demand for environmentally friendly industrial stocks, availability of a new booster to enhance the vaccine’s efficacy is a plus for these stocks. U.S. COVID-19 deaths rose more than 3,000 in the past week but less than the 4,000-plus in the previous week.
Cases in the country totaled 96,772,268, as of early Oct. 12, while deaths jumped to 1,063,310, according to Johns Hopkins University. America stands out dubiously as the country with the most COVID-19 deaths and cases.
Worldwide COVID-19 deaths in the past week rose by more than 10,000, down about 1,000 from the prior week. The number of deaths totaled 6,560,508, as of Oct. 12, according to Johns Hopkins. Global COVID-19 cases reached 622,605,453.
Roughly 79.7% of the U.S. population, or 264,562,221, have received at least one dose of a COVID-19 vaccine, as of Oct. 6, the CDC reported. Fully vaccinated people total 225,870,613, or 68%, of the U.S. population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to almost 110.6 million people.
The three environmentally friendly industrial stocks to buy can be purchased at discounted prices after the market’s drop so far in 2022. Even with high inflation, Russia’s war in Ukraine and rising recession risk after 0.75% rate hikes by the Fed in June, July and Sept. 21, the three environmentally friendly industrial stocks to buy appear much more resilient than economically sensitive cyclical stocks.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.