4 Metal Fabrication Stocks to Watch Amid Improving Industry Trends

Industry Overview - The Zacks Metal Products - Procurement and Fabrication industry is expected to benefit from diverse end-market demand as inflation eases and order volumes rise, supported by improving supply-chain conditions [1][4] - The industry primarily includes metal processing and fabrication service providers that transform metal into parts and components for various sectors such as construction, aerospace, automotive, and more [3] Current Trends - Order levels are anticipated to pick up as inflationary pressures abate, with the New Orders index showing a slight improvement to 47.1% in October from 46.1% in September [4] - The industry has faced challenges from supply-chain issues and labor shortages, but companies are focusing on pricing actions, cost management, and efficiency improvements to mitigate these challenges [5] Growth Catalysts - Automation and a customer-focused approach are expected to drive growth, with increasing demand from end-use sectors like manufacturing and aerospace [6] - Developing countries are seen as promising markets due to rapid industrialization, which is likely to create additional demand for metal products [6] Performance Metrics - The Zacks Metal Products - Procurement and Fabrication industry has outperformed its sector and the S&P 500 composite over the past year, gaining 66% compared to the sector's 30% growth [9] - The industry is currently trading at a forward 12-month EV/EBITDA ratio of 6.04, significantly lower than the S&P 500's 24.81 and the Industrial Products sector's 15.76 [11] Company Highlights - Northwest Pipe Company (NWPX): Implementing cost-reduction techniques and benefiting from the Infrastructure Investment and Jobs Act, which allocates $55 billion for water infrastructure projects [14][15] - Century Aluminum (CENX): Acquired a 55% interest in a bauxite mining venture, which ensures supply and lowers logistics costs, with plans to build the first U.S. primary aluminum smelter in 45 years [18][19] - Norsk Hydro ASA (NHYDY): Focusing on reducing costs and improving operational excellence, with plans to invest in low-carbon aluminum and renewable energy projects [20][21] - ESAB Corporation (ESAB): Expanding through acquisitions and simplifying product lines, with expectations for improved adjusted EBITDA and earnings per share in 2024 [22][23]