AZZ Inc. (AZZ): A Bull Case Theory

We came across a bullish thesis on AZZ Inc. on Shareholdersunite Essentials’s Substack by Shareholdersunite. In this article, we will summarize the bulls’ thesis on AZZ. AZZ Inc.'s share was trading at $108.38 as of December 17th . AZZ’s trailing and forward P/E were 10.37 and 15.82  respectively according to Yahoo Finance.

AZZ Inc. (AZZ) is a leading North American provider of sustainable metal coating solutions, serving infrastructure, construction, and industrial end markets, and has undergone a meaningful strategic transformation to focus on two high-margin core businesses: Metal Coatings and Precoat Metals. The company is the largest independent post-fabrication hot-dip galvanizer in North America, operating an extensive network of facilities that provide corrosion protection solutions which extend the lifecycle of steel assets for decades while reducing emissions and lifecycle costs.

Its Metal Coatings segment benefits from strong exposure to regulated infrastructure spending, including bridges, highways, utilities, and transmission towers, alongside growing demand from renewables, data centers, reshoring-driven industrial construction, and heavy commercial projects. This segment operates under a tolling model that largely eliminates commodity price risk, delivers structurally high margins in the 30% EBITDA range, and is protected by significant barriers to entry stemming from logistics intensity, large kettle requirements, permitting complexity, and long-standing customer relationships.

The acquisition of Precoat Metals in fiscal 2023 further repositioned AZZ as a focused metal coatings solutions company, making it the leading independent coil coater in North America. This business serves building products, appliances, HVAC, packaging, and transportation markets, benefiting from long-term secular trends such as repair and remodel activity, durable goods replacement cycles, and the accelerating shift toward aluminum packaging.

Precoat Metals’ scale, technical sophistication, and ability to secure long-term, high-volume customer contracts underpin attractive and stable economics, while pass-through paint costs limit input risk. Strategically, AZZ’s ability to participate both before and after fabrication allows it to capture a larger share of customer spend across the metal lifecycle.

Importantly, AZZ has simplified its portfolio through the monetization of its Infrastructure Solutions exposure, receiving substantial cash proceeds that have been used to aggressively deleverage and reinvest in its core coatings platform. With large addressable markets tied to infrastructure renewal and energy transition, a dense and defensible asset footprint, and a clearer strategic focus, AZZ is positioned as a high-quality, cyclical industrial compounder with durable competitive advantages and attractive long-term value creation potential.

Previously we covered a bullish thesis on Eastman Chemical Company (EMN) by Necessary-Damage5658 in November 2024, highlighting its positioning as a compliant chemical supplier benefiting from export restrictions. The stock has depreciated approximately 36.75% since our coverage due to broader industrial weakness. The thesis still stands as Eastman’s regulatory alignment remains advantageous. Shareholdersunite shares a similar perspective but emphasizes AZZ’s high-margin metal coatings transformation.

AZZ Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held AZZ at the end of the third quarter which was 24 in the previous quarter. While we acknowledge the potential of AZZ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.