The United States is in the midst of a historic economic expansion, which has now reached 116 months. While it’s bound to end eventually, there’s plenty of optimism to go around at the moment.
The most recent jobs report shows the country added 196,000 jobs in March to hold the unemployment rate at a relatively low 3.8%. The Federal Reserve has signaled it likely won’t raise interest rates in 2019, while some analysts even think interest rates could be reduced in the near future, for reasons economic or political.
It all suggests that the current economic boom will persist for a while longer, which would bode well for materials producer Allegheny Technologies (NYSE:ATI) and renewable-energy leader SolarEdge Technologies (NASDAQ:SEDG). Both businesses entered the year with considerable operating strength, but with shares trading at relatively low valuations. With first-quarter 2019 earnings just weeks away, investors might want to give these two stocks a closer look in April.
Is Wall Street overlooking this successful turnaround?
Allegheny Technologies develops and manufactures engineered materials and metal alloys for a wide range of applications. After making several difficult decisions in recent years to write off underperforming assets and exit low-margin applications, the business finds itself on firmer footing today and better positioned to exploit opportunities in core markets.
While half of total revenue is sourced from aerospace applications, Allegheny Technologies reported higher year-over-year sales in 2018 for all eight markets it serves across its two business segments. The high-performance materials and components (HPMC) segment delivered operating income of $335 million, up 36% from 2017. Meanwhile, the flat-rolled products (FRP) segment more than doubled operating income to $78 million in that span thanks to a focus on higher-margin products and new joint ventures. Both amounts were the highest since 2011.
That strength boosted the company’s operating margin to 10.2% last year, up from just 0.2% in 2016. Allegheny Technologies also reported its first positive net income since 2013, representing earnings per share of $1.78, and its highest net income since the commodity boom of 2008. The $3.4 billion business exited 2018 with…
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