KeyBanc Prefers These 2 Industrial Names Over The Rest Of The Pack

In a new report out this week, KeyBanc analyst Ryan Cieslak discussed the firm’s view on six industrial stocks. The report included two names that KeyBanc sees as attractive buys.

MSC Industrial Direct Co Inc MSM
Cieslak calls MSC one of the most compelling long-term growth and margin stories in the industrial sector. He praises the company’s e-commerce platform, its growth investments and its productivity.
 

Although end markets are slightly weak for now, Cieslak sees the intermediate to longer-term risk/reward balance as favorable at current price levels. KeyBanc initiated coverage on MSC at Overweight and set a target of $85 for the stock.

Lawson Products Inc LAWS
Cieslak believes that Lawson’s service-oriented business model puts the company in position to make outsized share gains long-term and enjoy best-in-class gross margins. He also believes that the company is now poised for significant earnings growth following several years of restructuring.

KeyBank initiated coverage of Lawson at Overweight and set a $30 target for the stock.

Applied Industrial Technologies Inc AIT
Although Applied is currently reasonably valued based on its 5-year mean EV/EBITDA, Cieslak notes the “challenged” end markets that the company is facing and the unclear trajectory of the companies newer oil & gas business. KeyBanc has a Sector Weight rating on Applied Industrial.

Kaman Corp KAMN
Cieslak likes Kaman’s niche Aerospace business and the margin opportunities within its distribution segment, but believes that buyers can afford to be patient following the stock’s outperformance in 2015. KeyBanc has a Sector Weight rating on Kaman.

Fastenal Co FAST
Cieslak sees a best-in-class growth and return profile at Fastenal, but once again feels that buyers can afford to be patient and wait for a lower entry point. KeyBanc has a Sector Weight rating on Fastenal.

DXP Enterprises DXPE
Cieslak is waiting for evidence of a recovery in drilling fundamentals, a pickup in investor sentiment and/or a further drop in share price before recommending DXP. KeyBanc has a Sector Weight rating on the stock.