Time is more important than money when it comes to investing. Sure, starting with a million-dollar trust fund would be a nice leg up, but even a huge nest egg doesn't guarantee success.
Committing to regularly putting money into the market over a period of years, even small amounts, offers a better guarantee of building up generational wealth than plunking down $1 million and hoping all goes well. The power of compounding is most powerful when allowed to work over long periods of time.
If you have just $100 to put to work today for your retirement, this pair of industrial stocks could make an important contribution toward your goal.
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Johnson Controls
The lingering effects of the pandemic can be seen in the performance of Johnson Controls (JCI -1.15%), a premier provider of building products and heating, ventilation, and air-conditioning (HVAC) systems for commercial and residential buildings. Here we are into our third year of dealing with this global health problem, and supply chains remain as snarled as ever.
That's a major headache for Johnson Controls, which despite having outsized demand and a huge backlog of business, still had to cut its full-year outlook last month because it just can't get all the materials it needs to fill orders. Where it previously forecast 8% to 10% organic revenue growth for the year, it now expects 8% to 9% growth. That's not devastating, but it shows just how much the pandemic continues to weigh on its financial performance.
Wall Street still sees Johnson Controls growing revenue at a compound rate of 5% annually for the next five years and, just as importantly, expanding operating income 8% annually. Earnings per share are forecast to grow at twice that rate, or more than 16% a year. The market, though, still takes a dim view of the building products and climate control specialist, dropping its stock 33% in 2022 to put it around $55 a share.
Trading at 15 times next year's earnings, Johnson Controls is a stock that offers an attractive opportunity based on its expected growth that also offers long-term potential.
Stanley Black & Decker
There are probably few people who aren't at least vaguely familiar with Stanley Black & Decker (SWK -0.67%) and its portfolio of name-brand hand and power tools. However, what may not be so obvious is just how many brands Stanley owns: Beyond its namesake Stanley and Black & Decker tools, it also owns Craftsman, DeWalt, Bostitch, Irwin, Mac Tools, MTD Products, Porter-Cable, and Proto.
Yet amid concerns about a recession, the impact of inflation, and the effect of supply chain issues, demand for tools has declined, and the market has responded by cutting Stanley's stock in half to about $86 a share. The tool maker, though, has embarked on a cost-cutting and inventory reduction program, which it believes can accelerate its return to a 30% gross margin by next year and to 35% by 2025.
Stanley looks to keep growing at two to three times the market's growth while increasing earnings per share at a 10% to 12% rate and keeping its free cash flow above net profits. It also intends to maintain a shareholder-friendly capital investment strategy, using half for mergers and acquisitions and returning the other half to investors.
Stanley Black & Decker has paid a dividend for 146 years while steadily increasing the payout every year for 55 years, making it a Dividend King (a company that has hiked its dividend for 50 years or more).
With its stock going for 13 times trailing earnings, 15 times next year's estimates, and a fraction of its sales, this is a top tool company worth nailing to your portfolio.
