PPG Industries ( PPG ), which makes glass, paints and coatings, is at the upper end of its buy range after breaking out of a flat base. It's climbed 61% this year and offers a dividend yield of 1.77%.
The stock broke out above its 128.52 flat-base buy point Dec. 14 in huge volume. It's at a new high and 5% above the buy point.
On Monday, Morgan Stanley upgraded the stock to overweight, comparing it favorably to rivalsValspar ( VAL ) and IBD 50 stockSherwin-Williams ( SHW ).
PPG has a 93 Composite Rating, second in the Chemicals-Paints industry group behind Sherwin-Williams. Its 93 Relative Price Strength Rating and B Accumulation-Distribution Rating are highest in the group, which was ranked 49th out of 197 as of Monday's IBD.
"PPG is a technically strong coatings company with broader scope and scale than Sherwin-Williams or Valspar. PPG has a far larger and more diverse presence globally and it has a far stronger position with global OEM manufacturers," Morgan Stanley said.
It added that financial returns for the industry are understated due to the lingering effects of construction downturns in North America and Europe, and weak industrial demand in China.
PPG's products are used in industries ranging from auto, aerospace and construction. It earns about 40% of revenue in the U.S. with the rest spread across the globe.
The company's fundamentals are mixed. Profit growth has averaged just 18% over the past three quarters, and revenue growth has also been weak.
The company was hit hard during the 2008-09 recession but has recovered on the back of stronger global manufacturing growth and a rebound in the U.S. housing market. Profit is seen rising 17% this year, which would mark the third straight annual gain.
PPG's 61% stock gain this year has far outpaced the S&P 500's 13% increase. Meanwhile, the company earlier this year boosted its quarterly dividend payment by 0.02, or 4%, to 59 cents a share. That's good for an annual dividend yield of 1.8%, just below the S&P average of 2.1%. The company has paid a dividend every year since 1899.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
