We recently published a list of 8 Best Industrial Stocks To Buy According to Analysts. In this article, we are going to take a look at where Chart Industries, Inc. (NYSE:GTLS) stands against other best industrial stocks to buy according to analysts.
Overview of The Industrial Sector
According to a report published on March 6th, 2024 by S&P Global, nearly half of the S&P 500 stocks hit an all-time high in 2024. From the end of 2023 to the start of March, 37 out of 78 Industrial stocks in the index hit an all-time high. This was recorded as the highest percentage and number of stocks hitting an all-time high in any sector. Generally speaking during the same time around 130 stocks hit an all-time high in 2024. As per the report, the ongoing trends in the Technology sector have been the driving factor behind the rise. Specifically speaking, Information technology has gained the most during the year, rising more than 12.3% from the end of 2023 to March 2024.
Fidelity Portfolio Manager Forrest St. Clair thinks that the surging growth within the industrial sector has been due to the trend of electrification across the United States. On October 14, he posted a note and mentioned that the industrial sector in the United States has improved over the past years, due to generous spending in the sector. Clair calls it a transformative force that is reshaping the industry and creating new investment opportunities. He mentioned that around $1 trillion has entered and will be entering the market via various acts including the Inflation Reduction Act and CHIPS and Science Act. He mentioned that while some of this investment has been utilized however most has been saved for future projects which thereby makes the outlook of certain industrial companies very positive.
While talking about the investment strategy to pick the best industrial stocks Clair pointed out to look for better-than-average companies which are trading below the average price and above average earnings per share growth. He further mentioned that electrification is not just a trend but rather is acting as a transformative force shaping the industry. He believes that companies that are investing in electric grids increasing electricity production for the country and developing electric vehicles will be well poised for growth and also benefit from the economic stimulus.
Moreover, Jason Weiner, Fidelity Portfolio Manager, also shares similar views. He mentioned that the recent federal laws have led to significant investments in the US economy, particularly benefiting industries focused on clean energy, manufacturing, and technology. Weiner highlighted that the CHIPS and Science Act aims to boost US semiconductor manufacturing by providing $52 billion in funding and tax incentives. The goal is to reduce reliance on foreign chip production, especially from countries like China. It also supports research and workforce development in technology sectors. He thinks that businesses involved in electric vehicles, semiconductors, and automation are likely to gain the most from these changes.
“In an interview with CNBC on September 30, Dave Sekera, Chief Market Strategist at Morningstar, shared his insights on the current state of the technology sector and the broader market. According to Sekera, the technology sector as a whole is “priced to perfection” and is trading at a 6% premium to fair value.
Our Methodology
To curate the list of the 8 best industrial stocks to buy according to analysts, we used the Finviz stock screener and CNN. We set the stock screener to show industrial stocks with target prices of 50% or more to compile an aggregated list. From the list, we cross-checked the analyst upside potential from CNN and ranked the stocks in ascending order of the analyst upside potential. We have also mentioned the number of hedge fund holders for each stock, as the Insider Monkey’s database of Q2 2024. Please note that the analyst upside potential was recorded on October 28th, 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Chart Industries, Inc. (NYSE:GTLS) The Best Industrial Stock to Buy According to Analysts?
A close-up of a large industrial compressor in the oil and gas industry.
Chart Industries, Inc. (NYSE:GTLS) specializes in designing, engineering, and manufacturing equipment and technologies for handling gases and liquids, mainly for clean energy solutions. The company’s technologies and equipment are used in storing and transporting Liquefied Natural Gas (LNG), hydrogen production, and environmental solutions.
One of the key differentiating factors that sets Chart Industries, Inc. (NYSE:GTLS) on track for long-term growth is the utilization of its technologies for hydrogen production. As the trend for clean energy and electrification across different industries is on the rise, governments around the globe are investing in a hydrogen-fueled economy. For instance, on October 13, 2023, the US Department of Energy announced $7 billion to launch seven Regional Clean Hydrogen Hubs across the United States.
As Chart Industries, Inc. (NYSE:GTLS) is one of the key companies in hydrogen technologies such investments are expected to fuel long-term growth. Apart from this the company also came in strong with its second-quarter results for fiscal 2024. Management noted that they are on track to achieve their medium-term fiscal targets which include mid-teen sales growth and mid-30% gross margins. Moreover, during the quarter the company achieved record sales of $1.04 billion after improving 18.8% year-over-year. Gross margins also reached a record high of 33.8% after improving 310 basis points.
Chart Industries, Inc. (NYSE:GTLS) is one of the best industrial stocks to buy according to analysts.
Aristotle Small Cap Equity Strategy stated the following regarding Chart Industries, Inc. (NYSE:GTLS) in its Q2 2024 investor letter:
“Chart Industries, Inc. (NYSE:GTLS), an industrial equipment manufacturer that provides cryogenic equipment for storage, distribution, and other processes within the industrial gas and LNG, hydrogen, helium, carbon capture and water treatment industries was added to the portfolio. Strong forward demand for LNG and accelerating hydrogen opportunities coupled with company-specific improvement initiatives should benefit the company moving forward.”
Overall, GTLS ranks 8th on our list of best industrial stocks to buy according to analysts. While we acknowledge the potential of GTLS to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
