Best Industrial Stocks to Invest in 2024

Industrial stocks are the shares of companies that make machinery and equipment, supplies and systems that are used to produce goods. Their products are generally not sold directly to consumers, though there are exceptions.

The industrial sector is sensitive to how the economy is doing. When there’s a slowdown, the industrial sector is one of the first ones to feel the pain. The businesses that industrial companies sell their products to cut down on their orders.

However, while there is some cooling of the economy under way, the S&P 500 Industrials Sector Index has edged out the S&P 500, rising 8.78% this year, and 24.64% over the past 12 months.

We’ve compiled a list of 10 industrial shares that appear to have momentum this year and may be worth a look. Read on to discover our picks of 10 industrial stocks to invest in right now:

Best Industrial Stocks to Buy in 2024

Here’s a quick overview of the shares that made our toplist:

  1. Carlisle Companies: The US company manufactures business products for more energy efficient buildings, including construction materials, and waterproofing technologies.
  2. Comfort Systems: It specializes in commercial, industrial and institutional air conditioning, heating, ventilation and electrical contracting through more than 40 subsidiaries in 177 locations.
  3. RTX Corporation: The defense company’s businesses, Collins Aerospace, Pratt & Whitney, and Raytheon, develop and sell advanced aviation, engineering integrated defense systems, and radars.
  4. WM: The waste company, formerly known as Waste Management, provides collection, recycling and disposal services to millions of residential, business and municipal customers in the US and Canada.
  5. Parker-Hannifin: The US company makes motion and control technologies for various industries, such as the aerospace and defence firms. It offers its products and services to customers in 104 countries.
  6. Honeywell: The large cap, with a market value of $128 billion, manufactures aerospace, automation and other industrial products, everything from high performance actuation systems for rockets, to security panels used for building access and construction equipment.
  7. The Greenbrier Companies: One of the leading manufacturers of freight railcars in the US and Europe, it also makes revenue from leasing and managing services for railcars, including a large repair network.
  8. Dow: The maker of plastics for packaging operates in three segments: Packaging and Specialty Plastics, Industrial Intermediates and Infrastructure, and Performance Materials and Coatings.
  9. FedEx Corp.: The US shipping company delivers a broad portfolio of transportation, e-commerce, logistics and business services to more than 220 countries and territories.
  10. Canadian Pacific Kansas City Limited: It owns a transcontinental freight railway with more than 20,000 miles of track across Canada, the US and Mexico.

A Closer Look at the Top Industrial Stocks to Invest in

Now, let’s take an in-depth look at the best industrial stocks available in the stock market that you could consider adding to your portfolio:

1. Carlisle Companies – Stronger Focus, Double-Digit Revenue Growth

Carlisle is transitioning from a group of diversified industrial companies to one that focuses only on building products. The plan, called Vision 2030, is meant to increase profitability by focusing on trends around labor savings, energy efficiency and the re-roofing cycle. The company took another step in that direction by buying MTL holdings for $410 million in cash. MTL provides prefabricated perimeter edge metal systems and non-insulated architectural metal wall systems for commercial, production plants, and institutional buildings.

carlisle companies price chart

In the first quarter, Carlisle’s revenue jumped 23% from a year earlier to $1.1 billion, and earnings per share soared 85% to $3.72 during the same period. Operating margin improved by 530 basis points to 20.5%. In terms of future results, for the full year, it’s predicting revenue increase of 10%, led by low double-digit growth in Carlisle construction, while it expects smaller growth in the mid-single digits from Carlisle weatherproofing technologies.

The company is a Dividend Aristocrat, meaning that it had raised its quarterly dividend for 47 consecutive years. It lifted it by 13% last year to $0.85. The yield is quite low, though, because of the stock’s 78% increase over the past year.

Ticker  P/E  Dividend Yield
NYSE: CSL 22.30 0.88%

2. Comfort Systems – Growing Through Acquisitions

Comfort Systems benefits from the reshoring trend in the global supply chain landscape. More and more firms are bringing back manufacturing and production to their home market. The company also sees growth opportunities involving data centers, electric-vehicle battery companies, chip-making companies and other manufacturing trends. Comfort Systems has always aimed to find future expansion through acquisitions. This year it has bought three companies, Summit Industrial Construction from Houston, Texas, J & S Mechanical Contractors from West Jordan, Utah, and Eldeco from Piedmont, South Carolina.

In the first quarter, revenue increased 30.8% year over year to $1.54 billion, and EPS rose 69% to $2.69 from the same period a year ago. First-quarter order backlog was $5.91 billion compared to $5.16 billion in the fourth quarter, and $4.44 billion in the first quarter of 2023.

Comfort Systems raised its dividend by 20% this year to $0.30. It has raised its dividend for 12 consecutive years, and the payout ratio is only 12%, so there’s plenty of room for continued growth.

Ticker  P/E  Dividend Yield
NYSE: FIX 30.02 0.40%

3. RTX Corporation – Improving Profitability, Streamlining Business

RTX, formerly known as Raytheon Technologies, sold its cybersecurity, intelligence and services arm last fall for $1.3 billion to focus on its other business and the move seems to be paying off through higher profits. One issue that had been dragging down the stock, quality issues regarding the GTF engine it makes for Airbus A320 jets, should subside.

rtx price chart

In the first quarter, revenue rose 12% year over year to $19.3 billion, and EPS jumped 32% over the same period to $1.28. Its backlog in the quarter was $202 billion, $125 billion of which was commercial orders and $77 billion in defense orders. For the year, RTX reaffirmed its outlook of $78 billion to $79 billion in revenue, which would be a 13.9% increase at the midpoint, and adjusted EPS of between $5.25 and $5.40, compared to $5.06 in 2023.

RTX raised its quarterly dividend by 7% in 2023 to $0.59. Since the company’s merger between Raytheon and United Technologies in 2020, it has raised its dividend by 62.8%.

Ticker  P/E  Dividend Yield
NYSE: RTX 39.69 2.32%

4. Waste Management – Turning Trash Into Treasure

WM has demonstrated that it can not only grow revenue but squeeze more profit out of that revenue. Its investments in automation and technology are paying off and it said driver turnover remained at record lows.

wm PRICE CHART

In the first quarter of 2024, revenue grew 5.5%, year over year, to $5.16 billion, while it had EPS of $1.75, which was 34.6% higher than in same period last year. WM is forecasting overall growth in revenue this year of between 5% and 5.75%, and full-year margin of between 29.7% and 30.2%, up slightly more than 100 basis points at the midpoint from 2023.

WM returned $557 million to shareholders in the quarter, including $307 in dividends and $250 million in share repurchases. Since it instituted a quarterly dividend in 2005, it has raised its dividend every year, including a 7.1% boost this year to $0.75 per share.

Ticker  P/E  Dividend Yield
NYSE: WM 34.00 1.44%

5. Parker-Hannifin – Flying High, Propeled by Aerospace Sales

Its £1.63 billion ($2.04 billion) purchase in 2022 of British aerospace and defense firm Meggitt, which pushed its market cap to $71 billion, is paying off as it has expanded Parker-Hannifin’s international reach while benefiting from synergies connected with Parker-Hannifin’s own aerospace and defense contracts.

parker-hannifin price chart

In the second quarter of fiscal 2024, Parker reported record revenue of $4.8 billion, an increase of 3% over the same period last year, while EPS rose 29% year over year to $5.23. The company operates in two divisions. While sales dropped 1% year over year for its diversified industrial segment, the aerospace systems segment saw sales rise 15% over the same period last year.

Parker is pointing to revenue growth of between 3% to 5% this year with EPS between $20 and $20.60, up from $16.10 in 2023. Parker raised its dividend by 10% to $1.63, the 68th straight year it has increased it. Only four other companies in the S&P 500 Index have a longer streak of dividend growth.

Ticker  P/E  Dividend Yield
NYSE: PH 26.91 1.20%

6. Honeywell – Solid Dividend, Improving Sales

The company’s businesses benefit from being in the right place for three trends: automation, advanced aviation technology, and energy transition, making everything from HVAC equipment to aerospace products to networking and security equipment. Fueled by rising sales in its commercial aviation and defense and space businesses, Honeywell reported a record backlog at the end of the quarter of $32 billion.

Honeywell price chart

In the first quarter, it reported $9.1 billion in revenue, up 2.7% over the first quarter of 2023 and EPS of $2.23, up 7.7%, year over year. The top performing segments were aerospace, which had $3.67 billion in sales, up 17.9% over the same period last year and energy and sustainability solutions, which rose 4.3%, year over year, to $1.53 billion in revenue.

The strong quarter led the company to reaffirm its full-year guidance, saying it expected revenue to be between $38.1 billion to $38.9 billion, up 5% at the midpoint and for adjusted EPS to be between $9.80 and $10.10, up between 7% to 10% over 2023. It also helps that the company has raised its quarterly dividend for 14 consecutive years, including a 4.8% increase at the end of last year to $1.08 per quarterly share.

Ticker  P/E  Dividend Yield
NASDAQ: HON 22.60 2.22%

7. The Greenbrier Companies – Big Backlog, High Lease Rate

Business is booming for the small-cap freight car company, with a lease fleet that has grown to 14,600, with 99% of them in use. It also got orders worth nearly $690 million for 5,900 new units and has a new railcar backlog of 29,200 units with a value of around $3.6 billion.

Greenbrier price chart

In the second quarter, Greenbrier had revenue of $862.7 million, up 6.6% year over year and EPS of $1.03, a rise of 7.3% over the same period last year. There are some clouds on the horizon, though. Greenbrier said it expects full-year revenue of between $3.5 billion and $3.7 billion, down from the $3.94 billion it delivered in 2023. However, the estimate is an increase over earlier guidance for 2024 of between $3.4 billion and $3.7 billion.

The company raised its dividend by 11% last year to $0.30, giving it an above-average dividend yield of around 2.43%. At less than 15 times earnings, the stock appears a bargain, particularly if freight orders continue to pick up.

Ticker  P/E  Dividend Yield
NYSE: GBX 14.90 2.43%

8. Dow – Dependable Dividend, Improving Margins

Dow saw lower sales in all of its divisions in the first quarter, yet, because of its cost-cutting and efficiency improvements, it saw an improvement in earnings. The company gets high sustainability marks and just began a joint development agreement with Procter & Gamble (NYSE: PG) to create a better recycling technology to convert hard-to-recycle plastic packaging into recycled polyethylene.

Dow price chart

Dow reported EPS of $0.73 in the quarter, up 30.3% year over year while sales dropped 9% to $10.8 billion from the same year-earlier period. However, they were up 1% sequentially. The only segments that outperformed were Performance Materials & Coatings and Industrial Intermediates & Infrastructure.

The company has kept its quarterly dividend at $0.70 for several years and has paid a dividend for 444 consecutive quarters and the yield is nearly 5%. In the first quarter, it paid out $693 million to shareholders, including $493 million in dividends and $200 million in share repurchases.

Ticker  P/E  Dividend Yield
NYSE: DOW 33.95 4.92%

9. FedEx Corporation – Finding Ways to Cut Costs, Boost Profit 

In February of 2023, the company announced a phased consolidation effort, called DRIVE, that would bring FedEx Express, FedEx Ground, FedEx Services and other FedEx operating companies into a single company, Federal Express Corporation. The point of the restructuring was to reduce corporate head count and find other efficiencies to save money, such as reducing routes and better deploying aircraft, and crews. So far, early into the plan, it seems to be working.

FedEx price chart

In the third quarter of fiscal 2024, the company had revenue of $21.7 billion, down 2% year over year, but EPS rose 15% over the same period last year, to $3.51.

“DRIVE is having a real impact, supporting both operating income growth and margin expansion,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer. “As we look ahead, we’re focused on continuing to deliver on DRIVE and our commitments to support long-term shareholder returns.”

The company raised its dividend by 9.5% at the beginning of the fiscal year to $1.26, the third consecutive year it has increased its dividend. FedEx also completed $1 billion in share repurchases in the quarter and expects to buy back an additional $500 million in stock in the fourth quarter.

Ticker  P/E  Dividend Yield
NYSE: FDX 14.99 1.94%

10. Canadian Pacific Kansas City Limited – Staying on Track After the Merger

One year into the merger of the two freight train companies of Canadian Pacific and Kansas City Southern, the move has been a lot less awkward than the new long name would suggest. The average train speed has increased by 13% and the company’s business in Mexico is picking up. In many ways, the combination helped the company thrive because a harsh winter in Canada led to lower grain shipments there, but US grain shipments increased.

CPKC price chart

In the first quarter, it reported combined revenue of $3.5 billion, up 2% year over year, though EPS fell by 3% compared to the same period a year ago to $0.93. The company is saying it expects high single-digit revenue growth through 2028 and double-digit core adjusted EPS growth during that period.

One big concern is the potential impact of a looming rail strike in Canada. In February, CPKC and Canada National rail asked Canada’s labor minister to appoint a conciliator for the bargaining process regarding a new collective agreement for rain conductors, engineers and yard workers. A possible strike or lockout could occur as soon as May 22. If that happens, it will cut into business, but with the addition of the US rail lines the company gained through the merger, it won’t be disastrous. The potential for a strike has driven down shares by 9% over the past month.

Ticker  P/E  Dividend Yield
NYSE: CP 24.91 0.77%

Industrial Stocks Are Bellwethers for the Economy

Industrial stocks are fairly sensitive to how the overall economy is doing, tracking and sometimes outperforming the S&P 500. The current economic conditions appear favorable. The chart below shows how the S&P 500 Industrials Index has performed against the overall S&P 500 Index over the past year:

Industrials vs SnP500 chart

Types of Industrial Companies

The sector is fairly wide, taking in firms that manufacture machinery or equipment, are connected with the production, transportation and construction of goods. There are several main types of industrial stocks:

Capital Goods:

Companies that make heavy machinery used in production by other businesses. This can include things like machine tools, construction equipment, and factory robots. Examples include Parker-Hannifan, The Carlisle Companies and Honeywell, GE Vernova, an energy equipment manufacturing and services company, which spun off from General Electric last year.

Aerospace and Defense Firms:

Companies that build airplanes, helicopters, and other aerospace vehicles, as well as defense firms that manufacture weapons and other defense products. Examples include RTX, aerospace manufacturing company TransDigm Group, Honeywell, and again, Parker-Hannifin. GE Aerospace began trading on the New York Stock Exchange in May, a year after it was spun off from General Electric.

Construction and Building Supplies:

Companies that produce the materials and equipment used to construct buildings and infrastructure. This includes things like cement, steel, lumber, and roofing materials, as well as building systems. Examples include the Carlisle Companies and Comfort Systems.

Transportation and Freight Services:

Transportation companies delivering goods or facilitate the transportation of products. Examples include FedEx, The Greenbrier Companies and Canadian Pacific Kansas City Limited and railroad holding company Union Pacific Corp.

Other Industrials:

Not all industrial firms don’t fit a specific category and come from various sectors. Waste Management, for example, hands the trash and recycling needs for both businesses and consumers. Dow produces products that are used in manufacturing as well as consumer products.

What Are the Top Industrial ETFs?

The continued high inflation rates mean it may be a while until we see interest rate cuts from the Federal Reserve. That makes picking out industrial stocks more difficult because they can be sensitive to the economy. Some industrial stocks, especially those that benefit from defense spending, may not be affected by an economic downturn.

One way to navigate the sector is by picking out an industrial ETF that offers broad exposure to the sector while bringing in a little diversification. Here are some of the top industrial ETFs:

The Industrial Select Sector SPDR Fund (NYSEMKT: XLI) has a portfolio of more than $14.6 billion in assets under management (AUM). It tracks industrial stocks that are in the S&P 500 Index. It is up more than 25% over the past year.

The iShares U.S. Aerospace & Defense ETF (NYSEMKT: ITA) focuses on stocks in the aerospace and defense industry, tracking an index that follows the performance of the aerospace and defense sector. It is up more than 16% over the past year.

Global X U.S. Infrastructure Development ETF (NYSEMKT: PAVE) tracks an index that is designed to measure the performance of US listed companies that provide exposure to domestic infrastructure development. It is up more than 39% over the past year.

Vanguard Industrials Index Fund ETF Shares (NYSE: VIS) tracks the performance of the MSCI US Investable Market Index (IMI)/Industrials 25/50, an index made up of stocks of large, mid-size, and small U.S. companies in the industrials sector. It is up more than 29% over the past year.

Invesco S&P SmallCap Industrials ETF (NYSEMKT: PCSI) is based on the S&P SmallCap 600 Capped Industrials Index (Index). The Fund normally invests at least 90% of its total assets in the securities that comprise the Index. It is up more than 34% over the past year.

Where to Get Industrial Stock Tips and Insights

A good source of industrial stock information is AltIndex, a subscription-based service that uses alternative data and artificial intelligence (AI) to rate stocks. AltIndex updates its data throughout the day.

altindustrial chart

Begin with the company’s ranking of best industrial stocks, which rates companies using AI score, updated every half an hour with real-time share prices. The AI score relies on several datasets, to show which stocks are likely to be active. Stocks are scored from 1 to 100, simplifying the selection for investors. AltIndex relies on web searches, customer satisfaction ratings, social media, and app downloads, to help it analyze a company.

AltIndex has more than 10,000 members and provides more than 100,000 stock insights and alerts each day, and has a strong win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well as many other useful features.

Conclusion

Industrial stocks are some of the biggest winners when the economy is in a growth cycle. They tend to be steady companies with long histories and above-average dividends. While their growth isn’t as spectacular as that of the stocks in some other sectors, such as healthcare or tech companies, industrial stocks can show growth through innovations or via acquisitions.

Industrial stocks are a great way to diversify your portfolio while adding a little more safety. Though they can see volatility, they tend to be more stable than other stocks and are favored by many income investors. It’s important, however, to invest in industrial stocks that are benefiting from long-term trends and are willing to innovate to keep up with or outpace their competition.

References

https://www.carlisle.com/investors/news/press-release-details/2023/Carlisle-Companies-Announces-a-Dividend-Increase-its-47th-Consecutive-Annual-Increase-and-Authorizes-Repurchase-of-an-Additional-7.5-Million-Shares/default.aspx

https://investors.wm.com/news-releases/news-release-details/wm-announces-first-quarter-2024-earnings

https://investors.parker.com/news-events/press-releases/detail/450/parker-reports-fiscal-2024-second-quarter-results

https://investor.honeywell.com/news-releases/news-release-details/honeywell-delivers-strong-first-quarter-results-and-beats-0

https://honeywell.gcs-web.com/stock-information/dividend-history

https://investors.gbrx.com/2024-04-05-Greenbrier-Reports-Second-Quarter-Results

https://s21.q4cdn.com/665674268/files/doc_financials/2024/q3/FedEx-Q3-FY24-Earnings-Release.pdf

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Jim Halley
Editor
Jim Halley
Editor

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…