Here's Why Hold Strategy is Apt for Howmet Stock Right Now

Howmet Aerospace Inc. HWM is benefiting from solid momentum in its commercial aerospace market. The continued strength in air travel, with wide-body aircraft demand picking up, has been supporting OEM spending. Pickup in air travel has been positive for the company as the increased usage of aircraft spurs spending on parts and products that it provides. Solid demand for air travel is also encouraging airlines to purchase more aircraft, which is again driving its sales.While the commercial aerospace market has remained the major driver for the company, the defense side of the industry has also been witnessing positive momentum, cushioned by steady government support. The company has been witnessing robust orders for engine spares for the F-35 program and spares and new builds for legacy fighters. Driven by strength across its business, HWM’s revenues increased 14% year over year to $1.88 billion in the second quarter of 2024.Howmet’s sound liquidity position allows it to reward shareholders with dividend payouts and share repurchases. Exiting the second quarter, its cash equivalents and receivables were $1.52 billion against short-term maturities of $782 million. It generated a healthy free cash flow of $437 million in the first half of the year.In the first six months of 2024, it paid out dividends worth $42 million and repurchased shares for $210 million. In July 2024, HWM hiked its dividend by 60% to 8 cents per share (annually: 32 cents). In the same month, the company’s board also approved an increase in its share repurchase program by $2 billion to $2.487 billion of its common stock.HWM Stock’s Price PerformanceImage Source: Zacks Investment ResearchIn the past three months, this Zacks Rank #3 (Hold) company has gained 26.1% compared with the industry’s 4.8% growth.However, HWM has been witnessing weakness in the commercial transportation market. In the second quarter, revenues from the commercial transportation market declined 4% on a year-over-year basis. The company expects demand in the commercial transportation markets served by the Forged Wheels segment to decline in the second half of 2024 across most of the end markets due to lower OEM builds.The company is also grappling with rising costs and expenses. In 2023, its cost of goods sold jumped 16.3% year over year while selling, general, administrative and other expenses also increased 15.6%. The trend continued in the first half of 2024, with the cost of goods sold increasing 9.2% to $2.6 billion. Selling, general, administrative and other expenses also increased 13.5% to $185 million in the first half of the year, primarily due to an increase in employment costs.Stocks to ConsiderSome better-ranked companies are discussed below.Markel Group Inc. MKL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.MKL delivered a trailing four-quarter average earnings surprise of 35.4%. In the past 60 days, the Zacks Consensus Estimate for Markel’s 2024 earnings has increased 3.5%.Crane Company CR presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.6%.Parker-Hannifin Corporation PH currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 (ending June 2025) earnings has increased 0.3%.Infrastructure Stock Boom to Sweep AmericaA massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.The only question is “Will you get into the right stocks early when their growth potential is greatest?”Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How To Profit From Trillions On Spending For Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Parker-Hannifin Corporation (PH): Free Stock Analysis Report Markel Group Inc. (MKL): Free Stock Analysis Report Crane Company (CR): Free Stock Analysis Report Howmet Aerospace Inc. (HWM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks