Unlock Hidden Potential: The Top 3 Spin-Off Stocks to Watch in 2023


  • These three spin-off stock picks focus on aggregates, technology solutions and live entertainment.
  • Knife River (KNF): It has spun off to focus on profitability through cost control, divestitures and strategic integration.
  • Crane NXT (CXT): It has spun off to focus on growth and value creation through diversification, acquisitions and capital allocation.
  • Madison Square Garden (MSGE): It anticipates continued growth in the live entertainment industry, driven by its venue portfolio.
Spin-Off Stocks - Unlock Hidden Potential: The Top 3 Spin-Off Stocks to Watch in 2023

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Spin-off stocks signify newly independent companies separated from their parent or holding companies. The objective is to execute their unique strategies and capture market opportunities.

Here I’ll dive into the top spin-off stocks for 2023, which are bred to capture enticing prospects for long-term value creation and growth. Investors can gain valuable and decisive insights by analyzing these spin-off stocks’ strategies, growth prospects and competitive advantages.

Knife River (KNF)

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Following its separation from MDU Resources (NYSE:MDU), Knife River (NYSE:KNF) is poised for long-term shareholder value creation.

The recently approved infrastructure funding packages present significant opportunities for Knife River. The company, which provides construction materials and contracting services in the Western, Central and Southern U.S., will benefit from both the Infrastructure Investment and Jobs Act and the American Rescue Plan Act. Each of those acts have a substantial portion of funding allocated to the states where Knife River operates. Additionally, state-level funding mechanisms further enhance the positive outlook for Knife River, as many of the states have implemented new funding for public projects.

Knife River’s competitive advantage lies in its vertical integration of all aspects of the construction industry. This integration ensures a reliable supply of high-quality materials and services, contributing to the company’s resilience and competitive position.

Crane NXT (CXT)

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The separation of Crane NXT (NYSE:CXT) from Crane (NYSE:CR) may create two pure-play companies, allowing Crane NXT to capitalize on investment opportunities. Crane NXT now operates the payment and merchandising technologies business. While Crane continues to handle the aerospace and electronics side of the company. 

Notably, Crane NXT has a strong track record of financial performance. They claim that they have the best-in-class margins and free cash flow conversion. Its focus on diversifying its business into higher-growth end markets contributes to its value-creation strategy. Also, the company has a strong balance sheet and substantial capital available for acquisitions.

Further, several secular growth trends provide tailwinds for Crane NXT’s core business growth. These include the growth of cash in circulation and continued labor scarcity. Although CXT’s automation, connectivity and service solutions could position it to benefit from these trends.

Madison Square Garden (MSGE)

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Madison Square Garden (NYSE:MSGE) has spun off from Sphere Entertainment (NYSE:SPHR). The venue portfolio includes Madison Square Garden, Radio City Music Hall, the Beacon Theatre and the Chicago Theatre. The company says it is on track to host nearly 900 events and more than 5 million guests this fiscal year. Not surprisingly, Madison Square Garden projects a double-digit percentage increase in events for fiscal 2024.

Moreover, the Christmas spectacular includes the Radio City Rockettes, a wholly-owned production that generated over $130 million in revenue. Madison Square Garden also benefits from long-term arena license agreements through MSG Sports.

Over 25% of Madison Square Garden’s revenue base comes from its sponsorship and premium hospitality businesses. It may deliver results surpassing pre-pandemic levels. Also, the company has built valuable multi-year marquee and signature-level partnerships and offers a wide range of premium hospitality products, capitalizing on its presence in New York City.

On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/07/unlock-hidden-potential-the-top-3-spin-off-stocks-to-watch-in-2023/.

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