WTS - After weakness Baird says it's time to buy industrial picks

After a summer of unsurprising underperformance, it may be time to re-engage with industrial stocks, Baird says in a check-in with process controls names. Valuation levels have become attractive on both absolute and relative basis, sentiment is negative and the margin and supply chain headwinds are nearly priced in, analyst Michael Halloran and team write. "We see 2022 as a healthy earnings growth year, driven by still strong underlying demand trends broadly, underappreciated secular/cyclical dynamics, and normalizing supply chain and inflation headwinds that likely turn into 2022+ margin tailwinds," they say. And the firm is splitting its attention between "perceived cyclical stories with catalysts/underappreciated secular drivers" - that includes Regal Beloit (NYSE:RBC) and Gates Industrial (NYSE:GTES) - "and secular/growth opportunities" (Nordson (NASDAQ:NDSN) and Generac Holdings (NYSE:GNRC)). Cyclical names among industrials have "languished" due to peak growth concerns, as well as China deceleration, supply chain/inflation pressure, and price/cost concerns, the firm

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After weakness, Baird says it's time to buy industrial picks