Industrial stocks are attractive in an uncertain market
Many top Wall Street analysts are bullish about value sectors like industrial sectors, and it’s fairly easy to understand why. With higher interest rates on the horizon and sharp moves to the downside in high valuation names, industrial stocks could be about to outperform this year and are already showing signs of strength in the uncertain market environment. There is also a lot to like about stocks in the industrial sector given the prospects for a recovery in the economy, as many of these companies tend to thrive during periods of expansion.
While all signs point to a solid year for this sector, investors still need to be very selective when investing money into the business at this time. That’s why we’ve compiled the following list of 3 interesting industry stocks to buy now to help you narrow your focus to the absolute best.
Each of these companies has a strong financial position, solid business model, and attractive earnings that make them solid choices to consider at this time.
This major manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel and electric locomotives is an interesting stock for a number of reasons. First, consider the role Caterpillar will play in rebuilding the country’s dilapidated infrastructure over the next few years. The US government is committed to spending significant sums on improving roads, bridges, railroads, electricity, and more, and Caterpillar heavy machinery will be vital in accomplishing this agenda. There’s also a lot to like about Caterpillar’s exposure to the mining and energy markets, which have been strong recently and could contribute to the company’s short-term profits.
Caterpillar is also an interesting industrial stock thanks to its aristocratic dividend position, which is testament to how well the company is run and its financial stability. The stock currently offers investors a 2% dividend yield and the company has paid higher annual dividends to shareholders for 28 consecutive years in this time. Finally, the fact that the company reported third-quarter sales and revenue of $12.4 billion, up 25% year-over-year, paints a picture of a company that benefits from many market factors including increased demand and price-rearing.
Firstsource Builders (NYSE: BLDR)
Most investors are aware that there is a significant supply imbalance going on in the residential property market, which is a good reason to consider adding shares from Builders Firstsource. It is a leading supplier of construction products, prefabricated components and value-added services to the professional market segment of new residential construction, repair and rebuilding. Homebuilders are trying to build as many new homes as possible, and this trend should continue for years to come, which bodes well for Firstsource builders and its shareholders.
It is a unique company in that it provides its clients with a complete home building solution, which basically means that it is a one stop shop for all their manufacturing, sourcing, delivery and installation needs. The stock is also trading at an attractive valuation even after a strong rally in 2021, with a P/E ratio of 8.96. In the third quarter, Builders Firstsource reported net sales of $5.5 billion, up 140% year over year, along with adjusted EBITDA increasing 244.4% to $975.9 million. With a lot of tailwinds working for this company and impressive earnings growth, this is definitely an interesting industry stock to consider adding at this time.
If you’re looking for a game that has deep value and has a long-term horizon, Delta Air Lines is probably one of the most attractive stocks in the industrial sector to consider adding. The airline industry is still licking its wounds after a rough few years due to the global pandemic, but it’s important for investors to remember that many of the industry’s problems will only be temporary. We are already seeing signs of a recovery in travel demand, and while the current wave of COVID-19 cases is certainly a factor to consider, international travel restrictions should ease again in the spring as case numbers are likely to decline.
Quoting the company’s CEO, Ed Bastian, “Omicron is expected to temporarily delay demand recovery by 60 days, but as we look beyond the peak, we are confident of a strong spring and summer travel season with significant pent-up demand for consumers and business travel,” Delta is perhaps the most quality name in the airline industry thanks to its strong balance sheet and its ability to consistently attract business travelers over the years thanks to outstanding expertise and credit card partnerships. The company beat fourth-quarter earnings per share estimates by more than 50% and beat revenue estimates by about 2% and it could be a bargain at current levels if you’re a long-term investor, so keep an eye on the stock as it gets close to reclaiming the 200 moving average today.