Investors had high optimism for the industrial sector coming into 2022 as the U.S. economy recovered from the pandemic. However, this year, high inflation, rising interest rates, and ongoing supply chain interruptions have weighed on the industrial sector. Travel-related industries have been hit particularly hard by the conflict between Russia and Ukraine, while many aerospace and defense stocks have surpassed.
The Industrial sector includes Industrial Stocks that produce machinery, equipment, and supplies used in construction and manufacturing and those that provide related services. These Industrial Stocks companies are closely tied to the economy, and their business volume often falls sharply during recessions, though each industrial subsector performs differently.
To aid you in finding the best Industrial Stocks for your portfolio, here are the top 10 Industrial Stocks to buy in 2022 with the best value, the fastest growth, and the most momentum.
Honeywell International Inc.
Honeywell is an Industrial Stocks corporation focusing on aviation, construction and industrial process automation, and other industrial materials and equipment. Analyst Joshua Aguilar says Honeywell can perform even in a challenging climate of supply chain disruptions as its solid first-quarter earnings report, which included 13% order growth and 20% long-cycle order growth is a testament.
Boeing as Industrial Stocks company is one of the world’s largest commercial airplane producers and the most prominent U.S. defense contractors. Boeing’s narrow-body business took a knockout from the extended grounding of its 737 Max, but analyst Burkett Huey says Boeing shares are attractively valued in 2022. Huey says Boeing’s share of the global narrow-body market will fall from around 50% to 40% in the coming years. Still, it should maintain its approximately 60% share of the wide-body market, which may not return to the highest levels until 2030.
3M is a diversified industrial, health care, and consumer product manufacturer. An analyst says 3M’s first-quarter earnings report disappointed, but the Industrial Stock is suitable for long-term investors. The analyst says there is still significant room for upside in health care given that healthcare procedures remain about 10% to 15% below pre-pandemic levels.
General Electric Co.
General Electric is an Industrial Stock corporation focusing on jet engines, gas, wind turbines, medical scanning, and imaging equipment. General Electric Stock has been down 37% in the past year, but an analyst says there is significant valuation upside for patient investors. In 2021, GE announced a plan to break the company into three distinct, publicly traded companies focused on aviation, health care, and energy.
Illinois Tool Works Inc.
Illinois Tool Works is a diversified manufacturer serving the industrial and consumer end markets. An analyst says Illinois Tool is a collection of well-run businesses with strong competitive moats. He says the company’s products are devised to make customers’ businesses affordable to run and more competent. The analyst says Illinois Tool will further expand its operating margins by focusing on its most important customers and profitable products.
Eaton Corp. PLC
Eaton is an expanded Industrial Stok equipment and parts producer that makes electrical systems and components. An analyst predicts Eaton will organically grow its revenue in the mid-single-digit percentage range or more and expand its operating margins to about 21.5% by 2025. He also predicts more than 10% annual earnings per stock growth and free cash flow margins in the mid-teen percentage range.
Emerson Electric Co.
Emerson Electric is a diversified global Industrial Stock technology company. Emerson Electric is said to be the “undisputed powerhouse” in process manufacturing in the U.S. He says the company is either first or second in market share in various product categories within a $214 billion total addressable market in industrial automation. Emerson has a sizeable installed base of customers that appreciate its unique expertise, and automation is the best area for manufacturers to invest in increasing profits in the long-term potential.
Parker-Hannifin produces industrial pneumatic, hydraulic, and vacuum motion and control systems. The Industrial Stock company is well-run and diversified, operating in a broad range of markets. Amid an environment of rising costs, Parker-Hannifin’s operating margins increased by 1.3% in the quarter. Its technology also has a high degree of intellectual property protection, limiting competition.
TransDigm Group Inc.
TransDigm designs and produces aircraft parts for manufacturers and commercial and military aircraft operators. Huey, an analyst, says TransDigm will retain pricing power even in an inflationary environment. He says TransDigm has a clear, consistent strategy of acquiring businesses that make proprietary aircraft products. TransDigm is the only producer of many of its products, ensuring it will maintain pricing power and financial leverage.
Cummins is an Industrial Stock leading manufacturer of truck engines, standby power equipment, and industrial filters. Analyst Dawit Woldemariam says Cummins is one of the highest-quality investments within the industrial sector. Given its large, experienced management team, Woldemariam says it’s understandable that Cummins would promote one of its internal leaders to fill the CEO vacancy.
How to Buy Industrial Stocks
You can buy industrial stocks in a taxable brokerage account or a tax-advantaged individual retirement account (IRA). Investing in individual Industrial Stocks is unlike buying a mutual fund or an index fund. When buying individual Industrial Stocks, you need to research companies and check their risks. Individual Industrial Stocks can be much more volatile than diversified funds, and you need to be aware of these risks before you buy.
This guide’s comments, opinions, and analyses are for informational purposes only and should not be considered individual investment advice or commendations to invest in any Industrial Stocks. Though we believe the information provided in this guide is reliable, we do not guarantee its accuracy or completeness. The views and strategies described in our guide may not be suitable for all investors because the market and economic conditions are open to rapid change.