On January 13, GW&K Investment Management’s Global Strategist Bill Sterling shared his views on how a turnaround in the U.S. manufacturing sector, after a few years of struggles, could generate compelling investment opportunities in industrial stocks. Sterling noted that AI/data center advancements have positioned some short-cycle industrial companies to benefit from high operating leverage, where even a slight increase in volume could translate into significant earnings growth. Sterling also reflected on the need for more supportive monetary policy in 2026. He added:
“Manufacturing is both directly and indirectly rate-sensitive. Directly, because financing costs hit equipment purchases and inventory carrying costs; indirectly, because housing and autos — big goods’ ecosystems — move with rates. As the labor market cooled last year, the Fed ended up cutting rates by 75 basis points (bps) in the fourth quarter and futures markets anticipate two to three more cuts this year.”
Industrial Machinery and Supplies stocks offer attractive long-term potential to investors, as these businesses drive economic growth. Lately, the segment has been characterized by advanced automation and infrastructure development, which requires underlying companies to keep up with an evolving landscape. Hence, investors need to have an eye for a robust business model that is driven by a futuristic strategy and is highly adaptive towards such shifts.
With that background, let’s explore our 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
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Our Methodology
To identify relevant stocks for this article, we conducted a screening of U.S.-listed Industrial Machinery and Supplies companies with market capitalizations above $2 billion. We then added a filter to exclude companies with share prices below $5 to ensure we do not include penny stocks on our list. Also, we shortlisted only stocks with positive upside potential according to TipRanks consensus as of the February 3 closing.
In the final screening step, we identified the number of hedge funds that held positions in these stocks as of the end of the third quarter 2025. Finally, we selected 15 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. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
15. Helios Technologies (NYSE:HLIO)
Number of Hedge Fund Holders: 17
Helios Technologies (NYSE:HLIO) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 26, the price target on Helios Technologies (NYSE:HLIO) was revised from $64 to $74, and the stock was assigned an Overweight rating by KeyBanc analyst Jeffrey Hammond.
The analyst raised his price target based on an optimistic view, which is driven by a mix of end-market improvements and high leverage on volumetric growth. Hammond’s forecast yields a 10% upside potential at the current level.
On January 17, Tomohiko Sano from JPMorgan initiated his coverage on Helios Technologies (NYSE:HLIO), assigning an Overweight rating to the stock. He estimated a target price of $80, resulting in an upside of almost 19%.
Sano is optimistic about the business due to its disciplined capital allocation strategy and organic growth across Hydraulics and Electronics divisions. According to the analyst, the company is also benefiting from a refreshed corporate environment cultivated by CEO Sean Bagan. Following a recent on-site visit by JPMorgan, Sano acknowledged the team’s operational focus and ongoing cultural transformation, that back his bullish stance on the stock.
Helios Technologies (NYSE:HLIO) is an industrial technology company that delivers high-performance electronic and engineered motion-control solutions. The business operates under two segments, Hydraulics and Electronics. Products are sold under various brands, including Sun Hydraulics, NEM, Daman, Murphy, Zero Off, HCT, Joyonway, and Schultes.
14. Donaldson Company (NYSE:DCI)
Number of Hedge Fund Holders: 25
Donaldson Company (NYSE:DCI) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On February 2, Baird analyst Robert Mason maintained his Outperform rating on Donaldson Company (NYSE:DCI), and also raised his price target on the stock from $100 to $110. His rating and price target revision came after the company’s announcement of its CEO transition, with current COO Richard Lewis set to replace Tod Carpenter, who is retiring.
Back on January 9, Jefferies also upgraded its rating on Donaldson Company (NYSE:DCI) from Hold to Buy. Moreover, the firm adjusted its price target from $92 to $120, implying an upside of nearly 19%. Such bullish revisions were based on recovery indicators witnessed across mining and non-residential construction markets. Going forward, Jefferies expects a favorable credit environment along with fiscal stimulus that will be a catalyst for the company’s gas turbine, industrial, and truck markets.
Donaldson Company (NYSE:DCI) produces and sells technology-led filtration systems and replacement parts across the globe. The business is trifurcated into Mobile Solutions, Industrial Solutions, and Life Sciences segments, and serves various markets including agriculture, defense, and manufacturing. Its offerings include air filtration, hydraulic and emissions systems, sensors, air inlet systems, ancillary components, and replacement parts.
13. RBC Bearings Incorporated (NYSE:RBC)
Number of Hedge Fund Holders: 30
RBC Bearings (NYSE:RBC) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 9, Michael Ciarmoli from Truist Financial raised his price target for RBC Bearings (NYSE:RBC) from $471 to $542, and reaffirmed his buy rating.
Ciarmoli believes that the 2026 outlook for the Aerospace & Defense industry remains positive after a strong performance during the previous year. Such favorable sentiment is being driven by an increase in aircraft manufacturing and sustained aftermarket demand, providing a boost to both OE and AM segments. Despite fewer catalysts to spark growth, the analyst expects the sector to benefit from recapitalization, geopolitical developments, and replenishment needs that will keep demand steady.
On January 6, KeyBanc analyst Steve Barger raised his price target on RBC Bearings (NYSE:RBC) from $475 to $535 and assigned an Overweight rating. Barger has based his bullish stance on expectations of elevated revenues, improved margins, and a modestly lower tax bill.
RBC Bearings Incorporated (NYSE:RBC) develops and sells engineered precision bearings, components, and essential systems. Operating through Aerospace/Defense and Industrial segments, the company offers journal, roller, and spherical plain bearings. It also specializes in plain bearings with metal-to-metal or self-lubricating designs.
12. Graco Inc. (NYSE:GGG)
Number of Hedge Fund Holders: 36
Graco Inc. (NYSE:GGG) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
As of February 3 closing, Graco Inc. (NYSE:GGG) had received coverage from 6 analysts, with 1 Buy rating and 5 Hold calls. With no Sell rating, the stock has a median 1-year price target of $93.67, offering almost 6% upside potential.
On January 29, Goldman Sachs revised its estimated target price on Graco Inc. (NYSE:GGG) from $83 to $89, and reiterated a Neutral rating on the stock. This upward revision came after the company announced its Q4 results, registering $593 million in sales and $169 million in segment EBIT during the quarter. For its Expansion Markets segment, a one-time upfront license fee of roughly $5 million was a major contributor to the EBIT.
The company’s management also provided 2026 guidance, anticipating an organic growth in the low single digits. This growth forecast jumps to mid-single digits after accounting for mergers and acquisitions. The organic growth forecasts exclude licensing revenues, which are expected to be volatile.
Graco Inc. (NYSE:GGG) manufactures fluid handling systems and equipment that are useful in moving, metering, mixing, and controlling spray fluids, coatings, and powder materials. The business is structured into four distinct segments, i.e., Industrial Products, Process, Lubrication, and Contractor. Their offerings have a broad application across several industries such as automotive, aerospace, chemical, and construction.
11. Watts Water Technologies (NYSE:WTS)
Number of Hedge Fund Holders: 36
Watts Water Technologies (NYSE:WTS) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 27, HSBC analyst Sidharth Sahoo initiated coverage of Watts Water (NYSE: WTS), assigning a Buy rating and a $460 price target. This results in a potential upside of nearly 51% from the prevailing level.
The analyst anticipates potential synergies from the company’s deal with Becton Dickinson, which bodes well for the stock. With a larger combined installed base and Watts Water’s own equipment replacement cycle, Sahoo expects the business to achieve top-tier growth and margins.
On January 8, Joseph Giordano of TD Cowen maintained a Hold rating on Watts Water (NYSE:WTS) and raised his price target from $250 to $275. The analyst attributed his upward revision of the target price to the company’s strong pricing despite challenging market dynamics. This has yielded impressive gross margins of nearly 49%. Giordano also acknowledged the company’s effective capital deployment while staying almost debt-free with a 0.02 debt-to-total capital ratio.
Watts Water Technologies (NYSE:WTS) specializes in systems such as valves, drains, and water quality products that conserve the flow of fluids and energy through buildings. Their products have various applications across commercial, industrial, and residential markets. Some of these include plumbing, heating, municipal, water safety, and conservation.
10. SPX Technologies (NYSE:SPXC)
Number of Hedge Fund Holders: 37
SPX Technologies (NYSE:SPXC) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
As of the close of play on February 3, sentiment remains moderately bullish around SPX Technologies (NYSE:SPXC). The stock received coverage from 6 analysts, 4 of whom assigned Buy ratings and 2 Hold ratings. With a median 1-year price target of $229, it offers almost 8% upside potential from the prevailing level.
On January 6, TD Cowen reaffirmed its Hold rating on SPX Technologies (NYSE:SPXC), with a price target of $225. The cautious rating is based on concerns regarding Nvidia’s cooling technology shift, which is driving massive changes across the data center infrastructure space. The firm, however, views SPX as well-positioned, with products that will remain integral for heat rejection in liquid-cooled data center systems, despite ongoing evolution in the broader landscape.
SPX Technologies (NYSE:SPXC) is a global supplier of engineered infrastructure equipment. With a focus on technologically advanced offerings that improve energy efficiency and infrastructure performance, they cater to various markets such as detection, measurement, and heating, ventilation & cooling (HVAC).
9. Stanley Black & Decker (NYSE:SWK)
Number of Hedge Fund Holders: 37
Stanley Black & Decker (NYSE:SWK) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 5, Damian Karas from UBS reiterated his Buy rating on Stanley Black & Decker (NYSE:SWK). The analyst lowered his price target estimate on the stock from $105 to $98. Despite the downward revision of the target price, Karas’ estimates still yield an impressive 24% upside potential.
On December 23, Timothy Wojs at Baird maintained a Hold rating on Stanley Black & Decker (NYSE:SWK). However, the analyst raised his price target from $75 to $85 following the company’s announcement of the sale of its CAM business to Howmet Aerospace for $1.8 billion. This valuation was significantly higher compared to Baird’s projections between $1 billion and $1.5 billion, and also leads to around 18x forward EBITDA multiple for CAM. Wojs also highlighted management’s plans to use these proceeds to reduce leverage.
Stanley Black & Decker (NYSE: SWK) delivers storage and fastening equipment, including hand & power tools, outdoor equipment, and related accessories. The company offers products under brands such as DEWALT, HUSTLER, and CRAFTSMAN and is organized into the Industrial and Tools & Outdoor segments.
8. Pentair plc (NYSE:PNR)
Number of Hedge Fund Holders: 38
Pentair plc (NYSE:PNR) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On February 4, Bryan Blair of Oppenheimer maintained his Outperform rating on Pentair plc (NYSE:PNR) but lowered his price target from $128 to $122. Despite this downward revision, his forecast still yields roughly 16% upside potential from the prevailing level.
Blair’s revision came at the back of the company’s results announcement for the fourth quarter, registering $1.18 in adjusted EPS. The analyst also noted that management’s 2026 guidance remained slightly below consensus expectations. However, he remains bullish on the stock with a recommendation to buy on dips.
Back on January 16, JPMorgan analyst Stephen Tusa also revised his price target on Pentair (NYSE:PNR) from $132 to $124, while reiterating his Overweight rating on the stock. Despite a downward revision of the target price, Tusa’s estimates still lead to an upside potential of nearly 18% for investors.
Tusa’s rating was based on JPMorgan’s broader adjustments to the electrical equipment and multi-industry segment, in line with the fourth quarter results preview. The firm remains optimistic on “growth related names into and out of the quarter.”
Pentair plc (NYSE:PNR) is an industrial manufacturing company delivering water solutions across the globe. It operates across 3 business segments: Flow, Water Solutions, and Pool. It delivers commercial, industrial, and residential water management solutions, including pressure vessels, wastewater reuse systems, separation systems, water disposal & supply pumps, fluid transfer pumps, and turbine pumps.
7. ESAB Corporation (NYSE:ESAB)
Number of Hedge Fund Holders: 38
ESAB Corporation (NYSE:ESAB) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On February 3, JPMorgan analyst Tami Zakaria reaffirmed her Overweight rating on ESAB Corporation (NYSE:ESAB). She revised her price target downward from $140 to $138 amid a potential dilutive impact of nearly 6 cents a share in 2026, from the company’s pending acquisition of Eddyfi. The analyst also expressed reservations on the acquisition multiple of 14.5x, which appears higher based on the precedent transactions analysis of the segment. However, Zakaria believes that the acquisition will turn accretive by roughly 5 cents in 2027.
On January 23, Bryan Blair from Oppenheimer raised his target price for ESAB Corporation (NYSE:ESAB) from $142 to $148. The analyst also maintained an Outperform rating on the stock, implying over 29% upside.
Blair noted an 8% decline in the share price since the company’s second-quarter results in August. This reflects investor skepticism about the company’s growth potential and margin expansion. However, he views prevailing headwinds as temporary and expects the company to deliver margin improvement and EBX-guided growth in the foreseeable future.
ESAB Corporation (NYSE:ESAB) is an industrial compounder that manufactures and supplies consumable products and equipment. These include cutting material, consumables & gas controlling solutions, and welding equipment. The company also offers software and digital solutions to enhance productivity and enable remote monitoring of welding operations.
6. IDEX Corporation (NYSE:IEX)
Number of Hedge Fund Holders: 39
IDEX Corporation (NYSE:IEX) is one of the 15 Best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
As of February 3 closing, sentiment around IDEX Corporation (NYSE:IEX) was strongly bullish. The stock had received coverage from 4 analysts, all of whom assigned Buy ratings. The median 1-year price target for the stock is $208.25, as per consensus.
On January 15, the price target on IDEX Corporation (NYSE:IEX) was revised from $195 to $211 by RBC Capital analyst Deane Dray. The analyst also reiterated his Outperform rating on the stock based on the upcoming fourth-quarter results preview for the Multi-Industry segment. Dray maintains an optimistic view of the sector and appreciates prevailing valuations despite “sluggish and uneven demand” across the industrials space. He also highlighted several multi-year tailwinds such as megaprojects, datacenter momentum, energy transition, and reshoring, that are expected to drive returns in the foreseeable future.
IDEX Corporation (NYSE:IEX) delivers applied solutions across the globe through its three business segments: Fluid & Metering Technologies, Health & Science Technologies, and Fire & Safety/Diversified Products. The company is structured around 50 decentralized businesses, offering high-impact products along with operational efficiency.
5. Xylem Inc (NYSE:XYL)
Number of Hedge Fund Holders: 45
Xylem Inc (NYSE:XYL) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 26, Brian Drab of William Blair initiated coverage of Xylem Inc. (NYSE: XYL) and assigned an Outperform rating. The analyst acknowledged the company’s comprehensive suite of offerings that extensively cover every aspect of the water and wastewater cycle, and labeled them as “often mission critical” for the customer base across utility and industrial segments. He views the company as “the world’s largest pure-play water company.”
On January 5, Brett Linzey from Mizuho Securities reaffirmed his Hold rating on Xylem Inc (NYSE:XYL). The analyst also lowered his price target estimate from $160 to $150. Linzey’s downward revision of the target price stems from Mizuho Securities’ broader adjustments to the electrical equipment and multi-industry group in line with the firm’s 2026 outlook. He anticipates “uneven terrain ahead” for the segment, yet believes that uncertainties linked with tariffs are starting to disappear.
Xylem Inc. (NYSE:XYL) is a water technology provider that designs products and solutions for treating, testing, and for the efficient use of water. These products and solutions are used in commercial, industrial, and residential buildings, as well as other public settings. Some of their offerings include wastewater pumps, filtration & disinfection solutions, biological treatment equipment, valves, and heat exchangers.
4. Crane Company (NYSE:CR)
Number of Hedge Fund Holders: 47
Crane Company (NYSE:CR) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 29, Scott Deuschle from Deutsche Bank maintained his Buy rating on Crane Company (NYSE:CR), following the company’s fourth quarter results announcement. The analyst also raised his price target on the stock from $235 to $238, implying almost 29% upside.
On January 29, Matt Summerville from DA Davidson also reaffirmed his Buy rating on Crane Company (NYSE:CR), with an estimated target price of $235. This yields an upside potential of almost 27% for investors.
Summerville noted the company’s recent inorganic growth strategy and strong prospects that back his bullish stance. He highlighted four recent deals involving Druck, Reuter-Stokes, Panametrics, and Optek-Danulat that led Summerville to make adjustments to his 2026 and 2027 forecasts for the business. He also shed light on an impressive demand backlog for the company’s Aerospace & Electronics segment, which offers strong visibility.
Crane Company (NYSE:CR) develops and sells engineered industrial products. The business is structured around two segments: Aerospace & Electronics and Process Flow Technologies. With an emphasis on mission-critical components and systems, it offers original and aftermarket equipment for the space, commercial, military, and defense aerospace segments.
3. Flowserve Corporation (NYSE:FLS)
Number of Hedge Fund Holders: 50
Flowserve Corporation (NYSE:FLS) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
As of the February 3 closing, Flowserve Corporation (NYSE:FLS) had moderately bullish analyst sentiment. The stock received coverage from 8 analysts, 5 of whom assigned Buy ratings and 3 Hold ratings. With no Sell rating, it has a median 1-year price target of $82.
On January 15, Deane Dray of RBC Capital maintained his Outperform rating on Flowserve Corporation (NYSE:FLS). The analyst also revised his target price estimate from $76 to $83, yielding close to 5% upside from the current level.
Dray’s upward revision is part of his constructive 2026 outlook for the Multi-Industry segment. Despite “sluggish and uneven demand” for industrials, he attributed his optimistic stance to the sector’s attractive valuation, along with datacenter momentum and megaprojects that are expected to drive returns. The analyst also noted several multi-year secular tailwinds, including energy transition, electrification, and reshoring.
Flowserve Corporation (NYSE:FLS) is a manufacturer and distributor of industrial flow management equipment for critical infrastructure industries. It offers fluid motion control solutions such as engineered & pre-configured industrial pumps, mechanical seals, auxiliary systems, and related aftermarket services. It also delivers equipment maintenance services, including advanced diagnostics, repair, retrofit programs, and field machining capabilities.
2. Dover Corporation (NYSE:DOV)
Number of Hedge Fund Holders: 55
Dover Corporation (NYSE:DOV) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On February 3, Walter Liptak of Seaport Research reiterated his Buy rating on Dover Corporation (NYSE:DOV). In the process, the analyst also adjusted his price target estimate on the stock from $230 to $245. His revised forecast now yields more than 18% upside for investors.
Liptak’s revisions are based on his view that the business model for Dover Corporation (NYSE:DOV) has evolved into a high-performance machine. This allows for the company’s valuation to increase from the prevailing level.
Back on January 31, Joe Ritchie from Goldman Sachs also revised his price target on Dover Corporation (NYSE:DOV) from $220 to $224, and maintained a Buy rating.
Ritchie’s bullish adjustments followed the company’s fourth quarter announcement, which beat consensus estimates. Despite slightly lower growth forecasts, management remains optimistic based on strong orders.
Dover Corporation (NYSE:DOV) is a diversified industrial products manufacturer. Their product portfolio comprises consumable supplies, equipment & components, aftermarket parts, wheel service equipment, vehicle diagnostics, digital solutions, and support services. The business has five segments, i.e., Climate & Sustainability Technologies, Clean Energy & Fueling, Engineered Products, Imaging & Identification, and Pumps & Process Solutions.
1. Parker-Hannifin Corporation (NYSE:PH)
Number of Hedge Fund Holders: 57
Parker-Hannifin Corporation (NYSE:PH) is one of the 15 best Industrial Machinery and Supplies stocks to buy according to Hedge Funds.
On January 30, Baird analyst Mircea Dobre reaffirmed his Outperform rating on Parker-Hannifin Corporation (NYSE:PH), while raising his price target estimate from $960 to $1,050. The revision now yields double-digit upside potential after Baird made adjustments to its outlook based on the company’s second-quarter results that beat consensus projections.
On January 30, Jeffrey Hammond from KeyBanc also reiterated his Overweight rating on Parker-Hannifin Corporation (NYSE:PH). The analyst adjusted his price target on the stock from $1,050 to $1,100, which results in almost 16% upside potential.
Hammond’s bullish views also stem from the company’s second-quarter results, exhibiting strong execution facilitated by a “choppy end market backdrop” outside the aerospace segment. He also highlighted impressive incremental margins for the business despite evident hurdles in the market, which makes him optimistic about business prospects.
Parker-Hannifin Corporation (NYSE:PH) develops and sells motion and control technologies and systems for various markets. It delivers precision-engineered solutions for aerospace and defense, energy, in-plant and industrial equipment, transportation, and HVAC & refrigeration segments. The business is structured around two segments, i.e., Diversified Industrial and Aerospace Systems.
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