In this article, we will take a look at some of the best industrial distribution stocks that are being highly favored by hedge funds. On June 15, Reuters reported flat U.S. factory manufacturing data during May, after several months of growth. Few economists attributed this to stockpiling by businesses, given the ongoing uncertainties related to the U.S.-Iran conflict. Chief U.S. Economist at Pantheon Macroeconomics, Samuel Tombs, reflected on this situation by stating:
“Many businesses have feared since February that the sudden closure of the Strait of Hormuz would trigger supply chain disruptions later this year, and so placed orders with manufacturers early.”
Vimal Kapur, CEO of Honeywell, spoke with CNBC on June 11 prior to the company’s aerospace business spinoff planned for later this month. Kapur reflected on this move, which would turn Honeywell into an automation pure play, by acknowledging the impact of artificial intelligence on operational automation.
Citing an aging working population and shortage of skilled labor, Kapur emphasized an increasing demand for automation, which is expected to be reshaped by AI capabilities. He also highlighted the customer viewpoint regarding operational automation across businesses. Customers perceive such a shift as an opportunity to expand business revenues, rather than curtailing costs. He mentioned:
“Our customers are looking at it not as a productivity opportunity. They are looking at it as a revenue-generation opportunity.”
With that background, let’s explore our 10 Best Industrial Distribution Stocks to Invest In According to Hedge Funds.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed industrial companies with market capitalizations above $2 billion. Next, we identified the number of hedge funds holding positions in these stocks as of the end of the first quarter of 2026. Finally, we selected 10 stocks with the highest number of hedge funds holding stakes and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10. GATX Corp. (NYSE:GATX)
GATX Corp. (NYSE:GATX) is one of the 10 best industrial distribution stocks to invest in according to hedge funds.
On May 22, GATX Corp. (NYSE:GATX) made amendments to its ongoing 5-year credit arrangement, which began back in May 2024, with a banking syndicate led by Citibank. In addition to recalibrating price terms linked to the company’s public credit rating, this change also extended the facility’s termination date by 1 year, to May 2031.
The applicable margin on revolving loans was reduced under the new arrangement. ABR-based borrowings have margins between 0 and 30 basis points, while SOFR-based borrowings have margins between 80.5 and 130 basis points, contingent on the firm’s rating.
Furthermore, the company obtained a decreased facility fee, resetting the grid from 7 to 20 basis points to lower recurring financing costs and expand financial flexibility for future operations and investment needs.
Recent analyst ratings also offer supporting views for the stock. During early May, Susquehanna revised its view of GATX Corp. (NYSE:GATX) by increasing the target price from $210 to $218. This results in an adjusted upside potential of almost 25% at the current level. The firm also maintained its Positive rating for the stock, backed by first-quarter results.
GATX Corp. (NYSE:GATX) is a railcar leasing company that leases tank containers, freight railcars, and locomotives and provides maintenance services. The company also makes commercial aircraft jet engines and leases aircraft spare engines.
