Luxfer Holdings (LXFR) and CVR Refining (CVRR): Growth and Income Stocks

In this week’s Growth & Income video, I discuss both Luxfer Holdings (LXFR) and CVR Refining (CVRR). Both of these companies are not well-known stocks, but that does not mean they don’t have positive future growth drivers and pay impressive dividends.

Luxfer Holdings (NYSE:LXFR) is a global materials technology company specializing in the design, manufacture, and supply of high-performance materials, components and gas cylinders. Its products are used in a vast array industries including aerospace, automotive, medical, technology, environmental, and industrial.

This company is expected to benefit from several current and future policy decisions from the U.S. government, and demographic shifts in America. First, the increased military budget will positively impact Luxfer as their aluminum components are utilized in both commercial and military aviation. Then the move towards more environmentally friendly fuels, and emission standards will utilize the company’s automotive catalytic converters, compressed natural gas cylinders (for natural gas vehicles), aluminum rail car components (reduces fuel consumption), and its lightweight vehicle chassis. Further, the President’s recent directive to refocus on America’s space program will increase the need for its aerospace and aluminum parts, where many are currently utilized in the International Space Station. Also, the aging U.S. population will benefit from several of Luxfer’s innovations including lightweight medical devices, the lightest portable oxygen tanks, and aluminum enclosures for MRI units. Lastly, the long-awaited infrastructure plan is expected to be released in early January where the improvement in the U.S. water systems is a key aspect of the plan. Luxfer is one of the leading innovators in water purification.

The company also recently announced that they acquired ESM Group’s Specialty Metals business. This move enables Luxfer to consolidate the North American market for non-steal related magnesium-based chips, and granules which will be used in several end markets; automotive, aerospace-defense, and healthcare. With this addition, the company will have four facilities that produce these compounds which are expected to enhance Luxfer’s earnings power in 2018.

As you can see in the graph below, after a big downturn from 2014 through the beginning of 2017, the company is starting to bounce back as both the stock price and future earnings estimates have seen improvement in the second part of 2017

Luxfer Holdings PLC Price and Consensus

Lastly, the company pays a really solid 3.28% annual dividend yield. So it has several positive growth drivers and pays a solid dividend.

CVR Refining (NYSE:CVRR) is an independent downstream energy company that refines petroleum primarily in the Midwest United States. It has refining and related logistics assets that operate in the mid-continent region. The company operates in Coffeyville, Kansas, and Wynnewood, Oklahoma.

The segment has seen several positive drivers as of late with U.S. crude production increasing, the Energy Information Administration (EIA) increasing both its 2017 and 2018 Brent crude oil price expectations, several consecutive weeks of increased active drills in the U.S, and OPEC reducing production. All of these factors combined give CVR a strong outlook for the next several quarters.

These future catalysts are in addition to the company’s recent earnings report where they saw huge gains in several key areas. On a year over year basis, net income jumped up +340%, with net sales rising by +19.1%, and adjusted EBITDA improving by +84.1%. Further, the Coffeyville, and Wynnewood refineries posted a total combined crude throughput of 203,093 barrels per day during the third quarter.

These positive results, and positive future catalysts have caused both the stock price and future earnings estimates to rise as of late as you can see in the chart below.