Atkore Stock: Well-positioned to garner attention (NYSE:ATKR)

The following parts are excerpted from This fund letter.

Atkore Co., Ltd. (New York Stock Exchange:ATKR)

Atkore Inc. specializes in customized products for the electrical field. ATKR serves a variety of fields including electrical, safety, and infrastructure. ATKR manufactures essential components for construction under its electrical division. Power systems such as conduits, cables, and installation accessories. Meanwhile, the Safety and Infrastructure division manufactures metal frames, mechanical pipes, perimeter security, and cable management solutions to ensure the protection and reliability of critical infrastructure. ATKR’s operations span key and emerging sectors of the economy, making it particularly well-positioned as we move towards an electricity-centric future.

ATKR operates in thematic markets with long-term growth, and is well positioned in key areas such as the solar power industry, data centers, and EV batteries. ATKR is a supplier of electrical components. plays an important role.sustained With policy initiatives such as moving manufacturing back from China to the United States, demand for solar power products should continue. Additionally, increased data center energy consumption due to advances in artificial intelligence (“AI”) strengthens ATKR’s outlook. EV sales may have slowed recently, but the long-term outlook remains positive. It is worth noting that these end markets are still in their infancy and have significant growth potential.

ATKR has demonstrated strong execution of a business plan characterized by product innovation, successful acquisitions, and prudent capital allocation. These efforts have paved the way for revenue growth and profit expansion opportunities. Revenue grew by 13.9% compounded over five years, and gross profit expanded by nearly 10% over the same period. To demonstrate confidence to shareholders, ATKR recently introduced a quarterly dividend of $0.32 per share. While ATKR’s strong free cash flow and moderate debt levels should allow it to steadily increase its dividend each year, we believe ATKR is investing the majority of its capital in its business.

Additionally, ATKR remains committed to ESG indicators and sustainability. ATKR continues to improve and strengthen his ESG objectives. These are important suppliers for companies that have an overall impact on reducing emissions.

While we are bullish on ATKR’s opportunity, our analysis also considers the potential risks and downside of the stock. One concern Wall Street has for ATKR is whether the surge in demand during the coronavirus pandemic was temporary. We believe this myopic view overlooks ATKR’s broader strategy, including acquisition capabilities, strong customer relationships, continued product demand, and a prudent pricing strategy.

Pre-COVID-19 earnings were less than $5.00, and post-COVID-19 earnings guidance for 2024 is expected to reach $17.00 at the midpoint. Interestingly, despite this strong earnings growth, the company’s stock currently trades at a discount relative to its peers and the broader market, with a valuation similar to pre-COVID-19 levels. As ATKR continues its growth trajectory, we expect multiple expansions. Despite the stock’s recent rally, we remain optimistic that ATKR’s performance will continue to perform well.

We remain optimistic about ATKR’s outlook given its strong end markets, ability to return capital to shareholders, and ability to revalue its stock to its peer group.