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According to Citi’s equity team, investments made in excess of depreciation can be important fundamental drivers.
“While overall growth in capital spending has been strong in recent years, it is more encouraging that a larger share of this spending is growth rather than replacement capex,” strategist Scott Chronert wrote in a note.
“At the index level, the year-over-year fundamental impact from growth capex may be overshadowed by macroeconomic factors,” Chronert said. “
“Interestingly, across nearly all (annual) cross-sections, the third-highest segment based on our growth capex measure achieves higher sales growth and maintains a higher EBITDA margin over the next three years.”
S&P 1500 rated Buy (NYSEARCA:SPTM) (NYSEARCA:ITOT) stocks with growth capex
- Alphabet (GOOGL) Three-Year Capital Expense/Depreciation Ratio 2.1 Growth CapEx ’24E ($ MLN) $20,305 % Growth of Total Capex ’24E 63%
- Amazon.com (AMZN) 2.3 $22,504 43%
- Yum! Brands (YUM) 1.7 $159 56%
- DX (RH) 2.5 $ 103 59%
- Winnebago Industries (OMS) 3.0 $54 65%
- PepsiCo (PEP) 1.9 $2,804 51%
- Constellation Marks (STZ) 2.8 $652 63%
- Dollar Tree (DLTR) 1.6 $511 41%
- JM Smucker (SJM) 1.8 $248 52%
- Simply Good Foods (SMPL) 2.4 $7 62%
- Merck (MRK) $2.5 2,035 53%
- Exelixis (EXEL) 2.3 $15 36%
- Glaukos (GKOS) 4.0 $12 57%
- Sunrun (RUN) 4.6 $2,102 81%
- Lockheed Martin (LMT) 1.7 $771 46%
- Equifax (EFX) 1.7 $241 40%
- Analog Devices (ADI) 3.0 $927 73%
- Nucor (NUE) 2.3 $1,284 58%
- Steel Dynamics (STLD) 3.5 $1,254 76%
- Alessandria Immobiliare (ARE) 5.9 $ 2,591 70%
- Equinix (EQIX) $1.91,529 48%
- EastGroup Properties (EGP) $3.5 433 72%
- Duke Energy (ALL) 2.2 $7,351 58%
- Xcel Energy (XEL) 2.3 $3,441 58%
- Edison International (EIX) 2.3 $2,633 50%