Three Equities Experienced Declines in 2024, Indicating a Potential Remarkable Rebound in the Later Part of the Year
Titled "Bouncing Back: UPS, Hexcel, and Allegion's Second-Half Comeback"
UPS, Hexcel, and Allegion have seen their shares dip in 2024 so far, but there's a compelling case for these companies to outperform the market in the second half and beyond. Let's scrutinize the investment potential of each firm.
UPS: Navigating Headwinds
A difficult 2023 for UPS saw challenges spill into early 2024, including slowing economic growth, hindering volume growth, and tedious labor contract resolutions. Fears of a labor strike compelled some customers to switch networks, further impacting UPS. However, these hurdles are likely to transform into advantages in the second half. The U.S. is predicted to witness growth in delivery volume beginning in Q2, and labor cost increases are now factored into the financials, easing comparisons. UPS is addressing weaker demand by slashing 12,000 jobs. Targeted second-quarter earnings on July 23 will reveal if UPS returns to volume growth in the U.S., paving the way for a recovery in 2024.
Hexcel: Aerospace Advancements Face Near-Term Challenges
Hexcel's emphasis on advanced composites optimizes fuel consumption and cuts lifecycle operating and maintenance costs. A clear trend in the aerospace sector sees more aircraft utilizing these materials. Despite the promising future, near-term concerns abound. Aerospace giant Boeing's slowdown in deliveries affects Hexcel. However, Boeing will eventually ramp up production in the second half, boosting Hexcel sales and margins. These near-term issues may be temporary, allowing investors to capitalize on a long-term growth story.
Allegion: Securing Future Success
Allegion's expertise lies in securing door and lock systems, which is ideal for a resilient market dependant on security and safety needs. Allegion's pivot towards wireless technology allows building owners to monitor and control access remotely, while reducing shrinkage, boosting security, and improving productivity. 30% of Allegion's sales originate from electronic products, yet adoption rates are only 10% in North America. This unexploited potential offers excellent growth prospects. Early-year sales dips should be short-lived, given the positive outlook for the North American residential market and optimistic Q1 comparisons.
To sum up, UPS, Hexcel, and Allegion boast robust fundamentals and catalysts positioned for a comeback in the second half of 2024. Investors committed to long-term gains may find these three undervalued stocks worthy of consideration.
Investors looking at UPS's second-half performance might be interested in the company's targeted earnings on July 23, as this could indicate a return to volume growth in the U.S., potentially leading to a recovery in 2024. (UPS)
Investors considering Hexcel's stock can take note of Boeing's production ramp-up in the second half, which is expected to boost Hexcel's sales and margins, reflecting the promising future of advanced composites in the aerospace sector. (Hexcel)
