Hubell, The Newcomer of SPX500
$Hubbell(HUBB)$ A manufacturer of electrical equipment with over 100 years of history. The company has a wide range of products, and it divides the entire $115 billion U.S. power industry into three levels. The lowest level is the low-profit market, such as cables, the middle level consists of electrical connectors and various accessories, and the top level includes circuit breakers, relay protection, and other markets competed by global giants like $ABB Ltd(ABB)$ and State Grid Corporation of China.
The products of the Hub Group focus on the $55 billion market in the middle, which doesn't require high technical content, except for reliability. If this enterprise were in China, industries with such low barriers would face overcapacity, industry consolidation, and perhaps only maintain a subsistence level.
How can it achieve a profit margin of over 10% in North America?
The industry background is that the power facilities in the United States are old, and in recent years, there has been significant infrastructure renovation, with substantial investments in the power system. The expected total investment growth is 1.5 to 2 times the GDP growth. Similar companies like $nVent Electric plc(NVT)$ and $Atkore Inc.(ATKR)$ have performed well in recent years. Aside from external favorable factors, in such a fragmented and highly competitive market, maintaining competitiveness can only be achieved through diligent self-management.
Looking at the last page of capital allocation, it is projected that cash flow generated from operations will be $2.8 billion from 2022 to 2025. The inefficient assets will be divested for $350 million, capital expenditures will be $500 million, dividends will be $1 billion, share repurchases will be $350 million, and mergers and acquisitions will be $1 billion.
Most of the book profits can be converted into free cash flow, and half of the free cash flow can be returned to shareholders. With such capital allocation, coupled with the potential for growth in the coming years, the market can assign a price-to-earnings ratio of 25 times to such an ordinary industrial company.
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HUBB is no longer worth shorting? I paid $2 a share for it 48 years ago. It is now up to $282 a share.
This is one heck of a growth company, and it's finally getting the recognition it truly deserves! 🚀🌟 I'm shouting it from the rooftops – it's a "Strong Buy" all the way! 💪💰
Quietly breaking out to a new all time high. Any suggestions for other ways to play this?
What a great stock...continues to chug along and un-discovered on Wall Street, Continue to hold
another solid beat from a great, healthy company. I'm proud to be a part of.