What Happened?
Shares of multi-industry consumer and professional products manufacturer Griffon Corporation (NYSE: GFF) jumped 4.3% in the afternoon session after a broad market rally lifted cyclical stocks, with the industrial sector benefiting from hopes of a Federal Reserve interest rate cut and an easing of trade tensions. The broader Industrials sector, where Griffon operates, rallied after a tame inflation report fueled investor optimism for a potential Federal Reserve interest rate cut. The chances for a rate cut at the September meeting improved to 95% following the report. Lower borrowing costs are seen as a key stimulant for economic activity, benefiting cyclical sectors like industrials that are sensitive to capital investment. This optimism was further bolstered by an agreement to extend the U.S.-China tariff truce, easing concerns about trade disruptions and prompting widespread gains across industries from building and construction to transportation and logistics.
The shares closed the day at $72.84, up 4.4% from previous close.
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What Is The Market Telling Us
Griffon’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock gained 4% on the news that an analyst at Baird maintained an "Outperform" rating on the company and raised the price target to $100 from $92. The new price target represented an 8.7% increase and implied a potential upside of over 24% from the stock's previous closing price. The analyst's report highlighted a favorable view of the diversified management and holding company amid current market conditions. The move also came as reports showed increased institutional interest in the stock. For example, a recent filing revealed that Jennison Associates LLC boosted its stake in Griffon by over 95% during the first quarter. Other investment firms, including Gallacher Capital Management LLC, also initiated new positions in the company.
Griffon is up 1.2% since the beginning of the year, but at $72.83 per share, it is still trading 14.5% below its 52-week high of $85.16 from November 2024. Investors who bought $1,000 worth of Griffon’s shares 5 years ago would now be looking at an investment worth $3,287.
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