By
Mark ToveyUpdated
Industrial stocks are the answer for everyone tired of hearing about cloud services and intangible software from firms that have never made a profit. Industrial companies have their feet firmly planted in the ground.
Put your hard hats on, because the value here is not in bytes and data, but in concrete, steel, and the relentless hum of machinery crafting the physical world we live in. Below, we highlight some top-notch industrial stocks that are the talk of the market and may be worth checking out for your portfolio.
Finding the best industrial stocks can be as complicated as keeping your eye on a factory production line as cogs, gears and conveyor belts churn out thousands of gizmos a minute. We’re going to help simplify things by powering down all the background noise.
Below, we’ve narrowed things down to the top 10 holdings in the MSCI US Investable Market Industrials 25/50 Index. This is a benchmark of large-, mid-, and small-cap US stocks in the industrials sector, as classified under the Global Industry Classification Standard (GICS).
| Stock | Icon | 1-year performance (to Feb. ’24) | 5-year performance (to Feb. ’24) | Link to invest |
|---|---|---|---|---|
| Uber Technologies (UBER) |  | 103.51% | 65.96% | Invest with XTBCapital at risk |
| General Electric (HON) |  | 67.23% | 124.87% | Invest with XTBCapital at risk |
| Caterpillar (CAT) |  | 27.83% | 149.92% | Invest with XTBCapital at risk |
| Union Pacific (UNP) |  | 18.03% | 52.51% | Invest with XTBCapital at risk |
| Boeing (BA) |  | -0.087% | -48.97% | Invest with XTBCapital at risk |
| Honeywell International (HON) |  | -5.41% | 29.88% | Invest with XTBCapital at risk |
| RTX (RTX) |  | -5.53% | 20.10% | Invest with XTBCapital at risk |
| Deere & Co. (DE) |  | -5.90% | 137.19% | Invest with XTBCapital at risk |
| Lockheed Martin (LMT) |  | -10.10% | 39.87% | Invest with XTBCapital at risk |
| United Parcel Service Class B (UPS) |  | -26.32% | 28.66% | Invest with XTBCapital at risk |
Industrial stocks represent businesses that deal with the creation, production, and distribution of goods.
These companies are involved in everything from constructing skyscrapers and manufacturing cars to producing energy and developing essential infrastructure.
Types of industrial stocks
The industrial sector is broad and encompasses a variety of companies that produce goods and services used in construction, manufacturing and infrastructure. Here’s a look at the main categories:
One reason to invest in industrial companies is the forecast growth in global population – from 8 billion in 2022 to approximately 8.5 billion by 2030. More people on the planet means more demand for just about everything factories produce.
In particular, investors are expecting to see a decade marked by industrial expansion in sectors such as construction, manufacturing, and energy, to meet the escalating needs of a larger global community.
Here are some of the powerhouse perks that could rev up your enthusiasm for investing in industrial stocks:
Industrial stocks might seem like a no-brainer given how essential these companies are to our everyday lives. But put on your hazard jackets, because there are more than a few dangers you should be aware of:
"No one can predict exactly how a year is going to unfold but there are some factors that could impact the industrial sector throughout the next year. Lower levels of inflation is good news for costs and if interest rates drop, this can also make debt cheaper.
However, if this happens some investors may turn away from sturdy cash-generating industrial stocks, and instead, look more towards growth areas. There’s no denying there will be lots of industrial demand as the global population increases, but whether this can be turned into sustainable wide profit margins remains to be seen."
Aside from purchasing individual stocks of companies within the industrial sector, there are other alternative methods to gain exposure to industrial stocks. Here are some of your options:
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Industrial stocks link your portfolio directly to the titans that manufacture everything from combine harvesters to aeroplanes. These companies should thrive with rising demand driven by global population growth. But don’t let the din of the production line deafen you to the risks.
The cyclical nature of industrials means profits and share prices could dive when economic tides turn. In addition, the hefty capital needed for these industrial giants often brings significant debt. As a slice of a diversified portfolio, industrial stocks could help you ride the tide of global economic growth. Remember, it’s not all smooth assembly lines – in the world of industrials, economic sparks can fly.
Investing in industrial stocks can offer stability and growth, particularly in companies with solid market presence and innovation. However, like all investments, they carry risks such as economic downturns and technological disruptions, which can impact financial returns.
Industrial stocks can provide a robust foundation for your portfolio, offering potential dividends and growth aligned with global economic expansion. They represent essential sectors like manufacturing, energy, and infrastructure, which are fundamental to economic progress.
The primary risks in industrial stocks include sensitivity to economic cycles, potential for technological obsolescence, and vulnerabilities in global supply chains. These factors can significantly affect the operational and financial performance of companies within the sector.
Mark is a freelance journalist whose work has been published in The Motley Fool and The Guardian, among other sites. He's worked as a data journalist and has a BA in Economics from the University of Sussex as well as an NCTJ journalism qualification. See full bio
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