3 Stocks to Buy out of the Top-Rated Zacks Diversified Operations Industry
At the moment the Zacks Diversified Operations Industry is in the top 12% of over 250 Zacks industries. This collective group of stocks also represents the Zacks Multi-Sector Conglomerates which is currently the top-rated sector out of 16 Zacks sectors.
Due to their stronger operating environment, these stocks look likely to outperform the broader market over the next 3-6 months. Furthermore, conglomerates are attractive to investors because of their diversity as these companies are typically made up of several independent businesses.
With that being said, here are three Zacks Diversified Operations Industry stocks that currently hold spots on the coveted Zacks Rank #1 (Strong Buy) list.
Carlisle Companies CSL
Expansive bottom line growth makes Carlisle Companies stock very attractive with a diversified global portfolio of niche brands and businesses that produce highly engineered products. Primarily used for various building solutions that enable energy efficiency along with waterproofing, Carlisle continues to have a high-profit margin on its products that extend to insulation and roofing in commercial and residential applications.
To that point, fiscal 2024 earnings are now projected to rise 16% to $18.03 per share despite sales forecasted to dip -5% to $4.85 billion. Plus, FY25 EPS is expected to expand another 11% with sales anticipated to rebound and rise 4% to $5.05 billion. Considering its bottom line expansion, Carlisle’s stock trades at a reasonable 18.9X forward earnings multiple. More importantly, over the last 30 days, FY24 and FY25 earnings estimates have risen 5% and 9% respectively.
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Griffon GFF
Griffon is another multi-sector conglomerate with diversified operations that extend to home-building products including garage doors and rolling steel doors. Operating primarily in North America, Griffon’s subsidiaries also manufacture branded consumer and professional tools along with residential, industrial, and commercial fans, home storage, and organization products.
Just as compelling as Griffon’s growth is the company’s valuation. Although Griffon’s stock has soared +83% over the last year GFF shares still trade at 14.1X forward earnings. This is a pleasant discount to the industry average of 20.9X forward earnings and the S&P 500’s 21X. Notably, GFF shares also trade below the optimum level of less than 2X sales.
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Even better, the strong price performance in Griffon’s stock looks likely to continue as annual earnings are projected to rise 6% this year and forecasted to climb another 24% in FY25 to $5.97 per share. Further alluding to more short-term upside, FY24 and FY25 earnings estimates are nicely up over the last 60 days.
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Vector Group VGR
We’ll round out the list with Vector Group, a diversified holding company that is certainly making the case for being undervalued considering its growth. Through its subsidiaries Liggett Group LLC and Vector Tobacco, Vector Group is a manufacturer of cigarette products and also owns New Valley LLC which holds minority investments in various real estate projects across the United States.
Vector Group’s attractive stock price of just over $11 is magnified by the fact that VGR shares trade at 9.1X forward earnings with EPS expected to rise 1% in FY24 and projected to expand another 7% in FY25 to $1.33 per share. Projections of steady top line growth is futher reason to believe in the company's earnings potential with sales forecasted to edge up 5% this year and rise another 5% in FY25 to $1.58 billion.
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It’s also noteworthy that Vector Group’s stock trades at just 1.2X forward sales and has a current annual dividend yield of 7.06% that towers over the industry average of 1.54% and mirrors the large payout that big tobacco players offer such as Altria Group MO and Philip Morris International PM.
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Takeaway
The growth prospects of these Zacks Diversified Operations Industry stocks are very intriguing considering their reasonable valuations. These companies should also be able to sustain in potential economic downturns due to the diversity of their business operations making now an ideal time to buy Carlisle Companies, Griffon, and Vector Group’s stock.
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Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report
Vector Group Ltd. (VGR) : Free Stock Analysis Report
Griffon Corporation (GFF) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
Philip Morris International Inc. (PM) : Free Stock Analysis Report
