In this article, we discuss 13 best industrial stocks to buy now. If you want to read about some more industrial stocks, go directly to 5 Best Industrial Stocks To Buy Now.
The United States economy in 2022 has not been as vibrant as 2021. In fact, soaring inflation and rising interest rates have combined to raise recession fears and resulted in a broad selloff at the stock market, pushing down benchmark indexes and turning investors away from even value-oriented sectors such as financials, industrials, materials and energy. However, as travel demand picks up again, inflation cools down, and infrastructure spending ramps up, industrial stocks in particular seem well-positioned to make a strong comeback.
Some of the best industrial stocks to buy in this context include TransDigm Group Incorporated (NYSE:TDG), Union Pacific Corporation (NYSE:UNP), and 3M Company (NYSE:MMM). Another catalyst for industrial stocks is the Russian war in Ukraine that has led to increased defense spending around the world. A quick solution to the war seems increasingly unlikely. Thus, aerospace and defense stocks are poised to outperform the broader industry in the coming months.
Our Methodology
The companies that operate in the industrial sector were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Lenny Kuhne on Unsplash
Best Industrial Stocks To Buy Now
13. Illinois Tool Works Inc. (NYSE:ITW)
Number of Hedge Fund Holders: 34
Illinois Tool Works Inc. (NYSE:ITW) manufactures and sells industrial products and equipment worldwide. It is one of the best industrial stocks to invest in. On August 24, Bank of America analyst Andrew Obin reinstated coverage of Illinois Tool Works Inc. (NYSE:ITW) stock with a Neutral rating and a $220 price target, stressing that the rating balances an improving long-term story with near-term macro headwinds.
At the end of the second quarter of 2022, 34 hedge funds in the database of Insider Monkey held stakes worth $366 million in Illinois Tool Works Inc. (NYSE:ITW), compared to 36 in the previous quarter worth $426 million.
Just like TransDigm Group Incorporated (NYSE:TDG), Union Pacific Corporation (NYSE:UNP), and 3M Company (NYSE:MMM), Illinois Tool Works Inc. (NYSE:ITW) is one of the best industrial stocks to buy now according to hedge funds.
12. Parker-Hannifin Corporation (NYSE:PH)
Number of Hedge Fund Holders: 35
Parker-Hannifin Corporation (NYSE:PH) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. It is one of the top industrial stocks to invest in. Parker-Hannifin Corporation (NYSE:PH) on September 16 sold its Aircraft Wheel and Brake Division, located in Avon, to Kaman Corporation. Aircraft Wheel & Brake has been a trusted provider of mission-critical wheel and brake technology products and solutions for more than 80 years.
On October 03, Barclays analyst Julian Mitchell kept an Overweight rating on Parker-Hannifin Corporation (NYSE:PH) stock and lowered the price target to $320 from $340. Among the hedge funds being tracked by Insider Monkey, Connecticut-based firm Viking Global is a leading shareholder in Parker-Hannifin Corporation (NYSE:PH), with 3 million shares worth more than $755.5 million.
In its Q2 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Parker-Hannifin Corporation (NYSE:PH) was one of them. Here is what the fund said:
“Parker-Hannifin Corporation (NYSE:PH), a U.S. company that specializes in motion and control technologies, is suffering from what we believe are investor misunderstandings and misjudgements, despite the efforts of the company’s unusually strong management team. In our opinion, since his promotion in 2015, CEO Thomas Williams has vastly improved operations and shifted the product portfolio to longer cycled, higher growth, higher margin and higher return end markets. The results are impressive. Margins, returns and earnings have increased substantially. With the expected closing of the Meggitt acquisition in the September quarter, the highly depressed aerospace segment will be its largest end market. We anticipate a rebound in aerospace revenue, which—combined with the company’s strong position in attractive businesses, including clean technologies and factory automation—should accelerate revenue growth. Parker Hannifin trades at a discount to other high-quality industrials, which we believe is unwarranted since its growth and returns should be similar or better. At a low-teens multiple of next year’s normalized cash earnings, Parker Hannifin is an attractive investment, in our view.”
11. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 36
Cummins Inc. (NYSE:CMI) designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It is one of the premier industrial stocks to invest in. Cummins Inc. (NYSE:CMI) recently revealed that it had been selected by Atura Power to design and manufacture a 20MW electrolyzer system for its Niagara Hydrogen Center in Niagara Falls. The proton exchange membrane electrolysis system of the former will become the centrepiece of Atura Power’s Niagara Hydrogen Centre, which has been manufactured at its Mississauga facility.
On August 18, JPMorgan analyst Tami Zakaria reinstated coverage of Cummins Inc. (NYSE:CMI) stock with a Neutral rating and lowered the price target to $245 from $264, remarking that Cummins Inc. (NYSE:CMI) will be in investment mode over the near and medium term as it develops zero emission solutions for commercial vehicles.
At the end of the second quarter of 2022, 36 hedge funds in the database of Insider Monkey held stakes worth $462.8 million in Cummins Inc. (NYSE:CMI), compared to 35 in the preceding quarter worth $584 million.
10. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 39
Eaton Corporation plc (NYSE:ETN) operates as a power management company worldwide. It is one of the major industrial stocks to invest in. Eaton Corporation plc (NYSE:ETN) recently won a large follow-on order for the US network of EV charging stations with 150 sites which will help it grab a larger market share in the fast-expanding EV charging business in the United States.
On August 04, Citi analyst Timothy Thein kept a Buy rating on the Eaton Corporation plc (NYSE:ETN) stock and raised the price target to $170 from $150, stating that the company was well-positioned to weigh powerful worldly tailwinds by its end market mix.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Eaton Corporation plc (NYSE:ETN), with 1.6 million shares worth more than $205 million.
In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Eaton Corporation plc (NYSE:ETN) was one of them. Here is what the fund said:
“We also added to Eaton (NYSE:ETN), a market leader in the electrical equipment industry and a position begun late in 2021. Eaton’s products enable the electrification of the power grid and, importantly, EV charging infrastructure. Share prices should benefit as EVs grow and investments increase to improve grid efficiency and resilience.”
9. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 42
General Dynamics Corporation (NYSE:GD) operates as an aerospace and defense company worldwide. It is one of the most prominent industrial stocks to invest in. General Dynamics Corporation (NYSE:GD) has been a strong performer over the past year as Russia’s war on Ukraine has increased defense spending expectations. Its Columbia-class submarine will be a significant growth driver as it is critical to the US Navy’s future strategy. General Dynamics Corporation (NYSE:GD) was also recently awarded a $532 million cost-plus-fixed-fee modification to a previously awarded contract for Lead Yard Support and Development Studies and Design efforts related to Virginia-class submarines.
On September 28, Wells Fargo analyst Matthew Akers kept an Overweight rating on General Dynamics Corporation (NYSE:GD) stock and lowered the price target to $249 from $256, noting the firm was investing to increase Gulfstream jet production.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Longview Asset Management is a leading shareholder in General Dynamics Corporation (NYSE:GD), with 30 million shares worth more than $6.6 billion.
In its Q2 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and General Dynamics Corporation (NYSE:GD) was one of them. Here is what the fund said:
“Finally, General Dynamics Corporation (NYSE:GD)’s defense business enabled the stock to resist the bear market’s downward pressure. We eliminated the position to fund more attractive holdings.”
8. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 42
Honeywell International Inc. (NASDAQ:HON) operates as a diversified technology and manufacturing company worldwide. It is one of the elite industrial stocks to invest in. Honeywell International Inc. (NASDAQ:HON) recently announced that it would soon debut a new ethanol-to-jet fuel processing technology. The firm said that producers can convert corn-based, cellulosic, or sugar-based ethanol into sustainable aviation fuel by the use of its new ethanol-to-jet fuel processing technology.
On October 10, Citi analyst Andrew Kaplowitz kept a Buy rating on Honeywell International Inc. (NASDAQ:HON) stock and lowered the price target to $213 from $222.
At the end of the second quarter of 2022, 42 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Honeywell International Inc. (NASDAQ:HON), compared to 50 in the previous quarter worth $1.76 billion.
In its Q3 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Honeywell International Inc. (NASDAQ:HON) was one of them. Here is what the fund said:
“The largest exited positions were Oracle, which outperformed significantly, and Texas Instruments and Honeywell International Inc. (NASDAQ:HON), which were roughly flat versus the market in the quarter but were edged out for inclusion by other stocks that became even more attractively valued.”
7. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 45
Caterpillar Inc. (NYSE:CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Caterpillar Inc. (NYSE:CAT) products and services are experiencing a strong demand as the US government invests heavily to modernize American infrastructure. In addition to the healthy demand in the end markets, elevated backlog levels should support revenue growth for the firm in the near term.
On October 06, JPMorgan analyst Tami Zakaria kept an Overweight rating on Caterpillar Inc. (NYSE:CAT) stock and raised the price target to $220 from $205, noting that the end user demand description remains positive for the firm.
At the end of the second quarter of 2022, 45 hedge funds in the database of Insider Monkey held stakes worth $3.2 billion in Caterpillar Inc. (NYSE:CAT), compared to 54 in the previous quarter worth $4 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:
“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”
6. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 47
Emerson Electric Co. (NYSE:EMR), a technology and engineering company, provides various solutions for customers in industrial, commercial, and residential markets. Recent reports indicate that the firm is in talks with Blackstone to sell its commercial and residential solutions business. Emerson Electric Co. (NYSE:EMR) provides the necessary items that are required to make homes comfortable and energy efficient. Its products range from thermostats and water dispensers to heating ventilation and air conditioning monitors.
On October 10, RBC Capital analyst Deane Dray kept an Outperform rating on Emerson Electric Co. (NYSE:EMR) stock and raised the price target to $102 from $96, noting that the management did a commendable job with associating the portfolio in/outs as well as the elemental performance and modified guidance in the past few months.
At the end of the second quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Emerson Electric Co. (NYSE:EMR), compared to 45 in the preceding quarter worth $1.4 billion.
Along with TransDigm Group Incorporated (NYSE:TDG), Union Pacific Corporation (NYSE:UNP), and 3M Company (NYSE:MMM), Emerson Electric Co. (NYSE:EMR) is one of the best industrial stocks to buy now according to hedge funds.
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Disclosure. None. 13 Best Industrial Stocks To Buy Now is originally published on Insider Monkey.
