3 Industrial Stocks Poised to Benefit from Easing Input Costs
The recent cooling of wholesale inflation and increasing gas prices have altered expectations for interest rates and profit margins, particularly for companies that heavily rely on input costs. Among such companies are PPG Industries (PPG), Dow (DOW), and Sherwin-Williams (SHW). These industrial stocks could benefit from easing input costs, which could lead to improved profit margins.
PPG Industries is a global coatings and specialty materials company that generates most of its revenue from Industrial Coatings. The company has reported mid single-digit raw material deflation and is working to lock in better volume deals with suppliers while maintaining pricing power across aerospace, protective, and industrial coatings.
Dow, on the other hand, is a global materials science company that produces plastics, chemicals, and coatings used in everyday products. The company has finished a $1 billion cost savings program and reported its most profitable quarter in four years. However, Dow is coming off a period of losses, carries higher risk funding, and pays a dividend that is not yet comfortably covered by earnings.
Sherwin-Williams develops, manufactures, and sells paints, coatings, and related products to professional contractors, industrial customers, commercial projects, and retail buyers. The company's raw materials basket of resins, solvents, and pigments has been reported as down by low to mid single digits in recent years, which can add support for margins when paired with firm pricing.