4 Metal Fabrication Stocks to Buy as Industry Trends Improve

Industry Overview - The Zacks Metal Products - Procurement and Fabrication industry is experiencing strong demand across various end markets, with improvements in order levels and strategic pricing expected to help maintain margins despite tariff impacts [1][2][4] - The industry primarily includes metal processing and fabrication service providers that transform metal into parts and components used in sectors such as construction, aerospace, automotive, and more [3] Current Trends - The Institute for Supply Management's manufacturing index showed a slight increase to 49.1% in September from 48.7% in August, indicating a potential recovery in the industry [4] - The Production Index registered 50.3%, reflecting growth in fabricated metal products, while new orders showed renewed demand momentum despite overall contraction in the New Orders Index [4] Strategic Initiatives - Companies are implementing strategic pricing adjustments, cost-reduction initiatives, and productivity enhancements to tackle rising labor, freight, and fuel costs [5] - Diversification of supplier bases and modifications to supply chains are also being pursued to mitigate tariff impacts [5] Growth Catalysts - Emphasis on automation and cost-effective technical solutions is positioning the industry for future growth, with expected demand increases in manufacturing, aerospace, and automotive sectors [6] - Rapid industrialization in developing economies presents additional long-term growth opportunities [6] Industry Performance - The Zacks Metal Products - Procurement and Fabrication industry ranks 19, placing it in the top 8% of 243 Zacks industries, indicating positive near-term prospects [7] - Over the past year, the industry has grown 15.4%, lagging behind the sector's 20.5% rise but outperforming the Zacks S&P 500 composite's 3.5% increase [10] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 17.38X, compared to the S&P 500's 17.93X and the Industrial Products sector's 19.57X [13] Company Highlights - Century Aluminum (CENX): Investing $50 million to restart over 50,000MT of idled production, expected to boost U.S. aluminum production by nearly 10% [19] - Ardagh Metal Packaging (AMBP): Anticipating 3% growth in shipments and has raised its adjusted EBITDA guidance for 2025 to $720-$735 million [24] - TriMas Corporation (TRS): Forecasting consolidated sales growth at the higher end of the 8-10% range for full-year 2025, driven by strong demand in its packaging segment [28] - GrafTech International (EAF): Sales volume rose 9% year-over-year, with a strong focus on the U.S. market and an expected 8-10% increase in sales volume for 2025 [32]