Xylem: Benefiting From End-Market Diversity And Good Cost Management

Six months ago, I thought that both Xylem (NYSE:XYL) and Franklin Electric (FELE) looked attractive on overdone sell-offs tied to supply chain challenges and a sharp correction in at least some theme stocks (like water stocks). Since then, the shares are up a little more than 11%, beating the S&P 500 handily as well as the broader industrial space (and beating Franklin by a bit).

I like Xylem’s leverage to water utility infrastructure spending, as well as industries like mining and food/beverage, and I think Xylem could benefit from relatively less exposure to construction markets that could see a sharper slowdown in the face of higher interest rates. Valuation is not as attractive anymore, but I would still regard this as a solid hold and a name to watch for another pullback.

 

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Xylem: Benefiting From End-Market Diversity And Good Cost Management