Five popular industrial sector stocks to look at

Amcor Ltd

AMC Details
Expansion of flexible packaging platform in China: Amcor Ltd (ASX: AMC) has recently completed acquisition of Sonoco. The group has now acquired Hebei Qite Packing Co. Ltd. for RMB 185 million and this move will help it expand its flexible packaging platform in northern China. AMC has a total of eleven flexible packaging plants in China. The group although runs a defensive type of a business but is acquisition driven. The stock surged 3.5% in last five days (as at December 08, 2016) and is trading at high levels with a high P/E value. We maintain an ‘Expensive’ recommendation at the current price of $ 14.45

 
AMC Daily Chart (Source: Thomson Reuters) 

BlueScope Steel Ltd

BSLDetails
Positive outlook: BlueScope Steel Ltd (ASX: BSL) stock moved up 50% in last six months (as at December 08, 2016) at the back of commodity price rebound. The group has delivered strong profits even at the time when global steel industry was at the bottom of the cycle. BSL’s underlying EBIT for FY16 was up 90% to $570 million, over prior year. Then acquisition of remaining 50% stake in North Star BlueScope Steel, US, added to the performance. Further, US infrastructure sector boost may enhance the performance. 

Cost savings across Australian Steel Product Business (Source: Company Reports)
 
There seems to be more potential in Australia at the back of the Port Kembla asset. The despatch volume growth in 1H FY17 for Australian Steel Products signals a positive trend. 1H FY17 seems to be positive and underlying EBIT is now expected to be at least $510 million. We maintain our ‘Hold’ recommendation on the stock at the current price of $ 9.64

 
BSL Daily Chart (Source: Thomson Reuters) 

James Hardie Industries PLC

JHX Details
Repurchase and cancellation of shares: James Hardie Industries PLC (ASX: JHX) recently reported that its adjusted net operating profit was of US$74.7 million for the second quarter of FY17 while the same was US$141.4 million for the half year. This indicates for a respective increase of 14% and 10% over the prior corresponding periods. There was a 11% rise in group adjusted EBIT of US$106.1 million for the quarter. During the quarter, JHX repurchased and cancelled about 6.1 million shares, at an aggregate cost of US$99.8 million. FY17 North America Fiber Cement segment EBIT margin is expected to be at the higher end of target range of 20% to 25% while net sales from the Australian business may be as per the average growth of the domestic repair and remodel and single detached housing markets in the eastern states of Australia. JHX is also expected to witness full year adjusted net operating profit to be between US$250 million and US$270 million. The group seems to have exposure to the US housing cycle and may get some boost. However, the group is using a part of its cash flow towards the asbestos claims. The stock is otherwise up 12.6% in last one month (as at December 08, 2016); and looks ‘Expensive’, given the prospects and uncertain market conditions, at the current price of $ 21.33

 
JHX Daily Chart (Source: Thomson Reuters)

Alumina Ltd

AWC Details
Changes to the AWAC joint venture agreements: Alumina Ltd (ASX: AWC) recently reported that Alcoa Corporation witnessed a power outage at the Portland aluminium smelter in Australia and as a result the production on one of two potlines has been halted. Meanwhile, AWC and Alcoa Inc. have made changes to the AWAC joint venture agreements and both parties have agreed to settle and terminate litigation related to Alcoa’s separation. AWC’s business is a quality business but the group reported for statutory net profit after tax of USD 8 million for half year to June 2016 against USD122 million of prior corresponding period. 

Financial Performance (Source: Company Reports)
 
The group declared fully franked interim dividend of 2.9 US cents per share. The stock has moved up 55.9% this year to date (as at December 08, 2016) and is trading close to its 52-week high price. We recommend a ‘Hold’ at the current price of $ 1.76

 
AWC Daily Chart (Source: Thomson Reuters) 

Boral Ltd

BLDDetails
Acquisition move: Boral Ltd (ASX: BLD) has recently agreed to acquire U.S. building materials company, Headwaters Inc. for $1.8 billion in cash. This move comes at the back of an aim to leverage from the increased infrastructure spending planned by President-elect Donald Trump. Boral has been said to pay $24.25 per share and the deal is expected to be completed mid-2017. The group earlier sold its 40% interest in the Boral CSR Bricks joint venture to CSR Limited for a total cash consideration of $133.9 million. The group had recognised an equity-accounted post-tax earnings contribution of $11.7 million from its 40% interest in the joint venture; and now expects about $6.5 million lower equity earnings contribution in FY2017 relative to FY2016. On the other side, about $20-$25 million post-tax profit on sale will be reported as a significant item in FY2017. The stock has moved down about 12% in last three months (as at December 08, 2016). We still believe that the stock is ‘Expensive’ at the current price of $ 5.34

 
BLD Daily Chart (Source: Thomson Reuters)

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