2 Industrial stocks for GA

Some investors believe growth is important, but don’t want to pay too much for it. Accordingly, they seek stocks in which growth and value go hand in hand, laying a solid foundation for what they hope will be a successful investment.

The five common fundamental indicators that growth at a reasonable price, or GARP, investors refer to when evaluating a stock’s prospects are:

  1. 12-month and forward PEG ratios less than or equal to 2.
  2. An average annual net margin growth rate of more than 5% over the last five years.
  3. Annual profit is expected to increase by more than 10% every year for the next five years.
  4. A positive evolution of the annual operating result over the last five years.
  5. A price/earnings ratio less than or equal to 25.

Thus, GARP investors may want to consider the following stocks as they meet the above criteria.

JELD-WEN

The first stock that GARP investors might consider is JELD-WEN Holding Inc. (JELD, Financial), a designer and manufacturer of doors, windows and walls based in Charlotte, North Carolina. Its products are used in new construction for single and multi-family homes and non-residential buildings.

The stock closed at $10.03 per share on Friday for a market cap of $845.12 million and a price-to-earnings ratio of 7.32. The stock price has fallen 59.88% over the past year, fluctuating in a 52-week range from $9.64 to $28.29.

Trailing 12-month PEG ratio was 1.56 and forward PEG ratio was 0.25 based on trailing five-year EBITDA growth rate of 4.70% and forecast growth rate five-year earnings per share of 29.30%.

Annual net profit margin increased by 359.43% per year over the last five years (from fiscal 2017 to fiscal 2021), while annual operating profit increased by 2.81% per year during the same period. For fiscal 2021 (which ended December 30), annual net profit margin was 3.54%, while annual operating profit was $271.99 million.

On Wall Street, the stock has three strong Buy, seven Buy and three Hold ratings. The average target price is $16.08 per share.

Worthington Industries

Worthington Industries Inc. (WOR, Financial), a Columbus, Ohio-based manufacturer of steel products for various industries including automotive, aerospace, agriculture and construction. The company also offers consumer branded products such as tools and products for outdoor living and celebrations. In addition to these products, the company sells several specialty products to gas producers and traders, as well as on-board refueling systems and gas containment solutions and associated services for the storage, transportation and distribution of industrial gases.

The stock closed at $51.25 per share on Friday for a market cap of $2.55 billion and a price-to-earnings ratio of 6.91. The stock price has fallen 3.74% over the past year, fluctuating in a 52-week range from $39.13 to $62.82.

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Trailing 12-month PEG ratio was 0.32 and forward PEG ratio was 0.16 based on trailing five-year EBITDA growth rate of 21.50% and forecast growth rate five-year earnings per share of 41.50%.

Annual net profit margin has increased by 163.61% per year over the past five years (from fiscal year 2018 to fiscal year 2022), while annual operating profit has increased by 28.30% per year during the same period. For fiscal 2022 (ended May 31), annual net profit margin was approximately 7.24%, while annual operating profit was $315.25 million.

On Wall Street, the stock has three holding ratings. The average target price is $52.50 per share.

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