The auto sector will see the continued adoption of vehicle innovations such as hybrid, electric, and autonomous cars. Across diversified industrials, there is a growing demand for automated industrial manufacturing and supporting products. There is likely to be continued capital expenditure and M&A activity to expand and enhance internal processes and/or product offerings. There is also likely to be increased investor interest in companies that directly provide automation and efficiency improvements or support these initiatives.
Company specific thoughts:
MGA is investing in vehicle electrification and autonomous driving technologies, and is focusing on vehicle light-weighting for fuel efficiency and automation to improve efficiency and margins. ATA is providing industrial automation design, equipment and other solutions for markets such as automotive transportation, life sciences, and consumer electronics. MAXR is providing high-resolution satellite earth imagery to government and commercial customers, and is benefiting from the growth in defense spending as a result of geopolitical uncertainty. It is also meeting the demand for new applications for high-resolution imagery. NEO, a provider of rare earth compounds and magnetic materials, is creating applications for vehicle electrification and vehicle emission controls.
Industrials: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.