Think Oil Will Stay Above $50? These 3 Stocks Could Be Huge Winners
It's way too early to get out the bunting, but there's no doubt that the recent uptick in the price of oil is likely to have a positive impact on the industry. The slump in capital expenditures caused by the COVID-19 pandemic in 2020 means that there could be some pent-up demand that will get released given an oil price above $50 a barrel. If that's the case, then Emerson Electric (NYSE: EMR), Honeywell International (NYSE: HON), and ChampionX (NASDAQ: CHX) are three industrial companies set to benefit. Here's why.
The company generated 58% of its segment earnings from its automation solutions segment in its fiscal 2020, with the rest coming from its commercial and residential solutions segment. The former segment is the focus here, and specifically the 24% of total company revenue that comes from process automation sales to the oil and gas industry.
For reference, Emerson's automation solutions orders declined significantly when the price of oil fell in the 2014-2016 period suggesting that a weak oil price is indeed bad news for the segment.
Source Fool.com
