Ingersoll-Rand: An Industrial Bargain

Focus: INDUSTRIALS

Elliott Gue Image Elliott Gue Editor and Publisher, Energy and Income Advisor and Capitalist Times

I look for a rotation out of the growth-oriented fare that’s led the market for much of 2017 and into cyclical and value groups including the financials, energy and industrial stocks, explains growth stock expert Elliott Gue, editor of Capitalist Times.


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To take advantage of this rotation, we’re adding industrial giant Ingersoll-Rand (IR) to our Wealth Builders Portfolio; the firm's largest division is Climate, which includes market-leading heating, ventilation and air conditioning (HVAC) brands Trane and American Standard.

At Ingersoll’s analyst day presentations earlier this year, management outlined a plan for the Climate business to grow from a $10.9 billion business this year into roughly a $12.4 billion business in 2020.

Around one-third of this growth is expected to come from overall global economic expansion, driving demand for HVAC units installed in offices, commercial buildings and residences.

However, two-thirds of that growth is expected to come from company-specific initiatives. One example of a growth driver is the company’s Auxiliary Power Unit (APU) aimed at the trucking market.

APUs are small electric or diesel-powered units that supply power to the sleeper cabs of large (think 18-wheeler) trucks. That power is used to run the HVAC system and other accessories such as lights and cooking equipment.

Currently, two-thirds of all sleeper cabs in the US do not have APUs.

 
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