Looking for the best industrial stocks to buy in 2024? Industrial companies are vital to the U.S. economy and are often viewed as a barometer of broader economic health. However, according to data from the Fed, the sector has faced some unique challenges, resulting in production contracting 0.8 percent YoY. Even so, some view this pullback as an opportunity to grab discounted stock with strong fundamentals.
That being said, we’ve highlighted 3 industrial stocks which are arguably worthy of long-term investments thanks to their steady cash flows, “strong buy” ratings, and upside potential. While risks remain, we see these picks as positioned for growth as conditions improve.
Union Pacific Corporation (UNP)
The first industrial stock is one of the largest and oldest railroad companies in the world, Union Pacific Corporation (NYSE:UNP). The company was founded in 1862 and is headquartered in Omaha, Nebraska. With an enterprise value over $181 billion, Union Pacific provides transportation services for various commodities and finished products, including:
- Agricultural goods,
- petroleum,
- chemicals,
- metals,
- automobiles, and
- intermodal containers.
Operating through its subsidiary Union Pacific Railroad, the company utilizes its extensive rail network spanning much of the western two-thirds of the country to connect businesses and communities across the regions it serves.
Union Pacific announced plans to open a new intermodal terminal in Phoenix, Arizona to connect Southern California seaports with the Southwest region. This expansion will provide shippers and receivers with faster transportation options, which mean better services and overall valuation of the company.
Despite a 10 percent drop in operating revenue to $5.9 billion amid reduced volumes and fuel surcharge income, Union Pacific strengthened operating performance during the third quarter of 2023. The company showed a 4 percent improvement in locomotive productivity, reaching 129 gross ton-miles (GTMs) per horsepower day. Union Pacific also extended the maximum train length by 1 percent to 9,537 feet while maintaining a flat fuel consumption rate of 1.052 gallons per thousand GTMS.
With the improved operating performance and analysts’ “Strong Buy” rating citing as much as 16 percent upside, the company appears positioned to drive future growth.
Honeywell International (HON)
The next on the list of industrial stocks is also one of the pioneers in its industry, Honeywell International Inc. (NYSE:HON). Honeywell is a global technology and manufacturing company founded in 1885 and headquartered in Charlotte, North Carolina.
Honeywell operates four main business segments:
- Aerospace, which provides aviation products and services;
- Building Technologies, which provides building control systems and software;
- Performance Materials and Technologies, which offers automation systems and specialty materials; and
- Safety and Productivity Solutions, which provides safety equipment, productivity software, and warehouse automation systems.
With an enterprise value of around $147 billion, the company is one of the most valuable industrial companies globally.
Honeywell recently announced plans related to the acquisition of Carrier Global Corporation’s Global Access Solutions business. The company plans to finalize its $4.95 billion acquisition by the third quarter of 2024 and will allow Honeywell to expand its building automation capabilities and become a premier provider of security solutions for buildings.
Honeywell reported strong third-quarter results with a staggering $9.2 billion in sales, up 3 percent YoY. Earnings per share were flat at $2.27 per share. However, it did beat expectations.
Investors will appreciate that Honeywell allocated $2 billion during the quarter to invest in the business and repurchase 5.3 million shares. On top of that, analysts rate the stock a “Strong Buy” with a high target of $250, representing an upside potential of over 22 percent from current levels. Looking at these factors, we think the company is moving in a positive direction.
Dover Corporation (DOV)
The last on the list of industrial stocks is Dover Corporation (NYSE:DOV). Dover is a diversified industrial company founded in 1947 and headquartered in Downers Grove, Illinois. The company provides equipment, components, software solutions, and services, such as vehicle service, industrial automation, aerospace, and more, to various markets globally. The company operates through five business segments, offering products such as mechanical indexers, robotic grippers, fueling equipment, product traceability systems, etc. Dover sells its products directly and through distribution networks and now has an enterprise value exceeding $24 billion.
Dover further expanded its global footprint with the recent acquisition of FW Murphy Production Controls, a provider of industrial solutions. The deal enhances Dover’s portfolio with the addition of FW Murphy’s compressor controls, monitoring systems, and predictive maintenance software. The acquisition presents growth opportunities through synergies with Dover’s existing services.
On October 24, 2023, Dover reported steady sales of $2.153 billion for the third quarter. Net income rose slightly to $290 million, driving a 3 percent increase in EPS to $2.06. Over the first nine months, Dover generated $6.3 billion in total revenue and $761 million in net profit. Given the company’s healthy metrics and price target of $180 that indicate over 17 percent upside potential, analysts rate this company a “Strong Buy” for new investors.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
