The industrial sector includes companies that produce machinery, equipment, and supplies used in construction and manufacturing, as well as those that provide related services. These companies are closely tied to the economy, and their business volume often falls sharply during recessions, though each industrial sub-sector often performs differently.
Well-known industrial sector companies include Lockheed Martin Corp., Honeywell International Inc., and 3M Co. The industrial sector also includes companies that provide air transportation services, such as United Airlines Holdings Inc.
Industrial stocks, represented by an exchange-traded fund (ETF)—the Industrial Select Sector SPDR ETF (XLI)—have underperformed the broader market, providing investors with a total return of 2.0% compared to the Russell 1000’s total return of 6.4% over the past 12 months. These market performance numbers and all statistics in the tables below are as of April 19, 2022, except for the Momentum table, which is as of April 20, 2022.
Here are the top three industrial stocks with the best value, the fastest growth, and the most momentum.
These are the industrial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
| Best Value Industrial Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| Louisiana-Pacific Corp. (LPX) | 62.79 | 5.4 | 4.5 |
| Ryder System Inc. (R) | 66.38 | 3.6 | 6.9 |
| Builders FirstSource Inc. (BLDR) | 63.63 | 11.3 | 7.5 |
Source: YCharts
- Louisiana-Pacific Corporation.: Louisiana-Pacific makes building materials and engineered wood products. The company provides oriented strand board sheathing, siding and trim, I-joists, laminated veneer lumber, and similar products. On March 31, the company announced the launch of LP NovaCore Thermal Insulated Sheathing, a line of sheathing panels designed to reduce energy loss and make buildings more cost-efficient. These products will be available for sale in summer 2022.
- Ryder System Inc.: Ryder System is a logistics and transportation company. It provides fleet, transportation, and supply chain services, which includes leasing and providing maintenance services for trucks, tractors, and trailers.
- Builders FirstSource Inc.: Builders FirstSource makes and distributes building products and provides integrated services to professional homebuilders. It manufactures roof and floor trusses, wall panels, stairs, and vinyl windows. It also manufactures advanced and digital products such as computerized pre-cut lumber and precision framing and visualization tools for architectural design. On March 1, the company posted results for Q4 2021, ended Dec. 31. Net income more than doubled on a 23.7% increase in net sales growth year-over-year (YOY). Builders FirstSource cited both its merger with BMC, double-digit organic growth and commodity inflation as three factors impacting performance.
These are the top industrial stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are factors that are critical to the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs), which may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
| Fastest Growing Industrial Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| TransUnion (TRU) | 95.07 | 18.3 | 894.3 | 26.6 |
| Expeditors International of Washington Inc. (EXPD) | 98.69 | 16.5 | 129.3 | 81.0 |
| Builders FirstSource Inc. (BLDR) | 63.63 | 11.3 | 95.8 | 83.1 |
Source: YCharts
- TransUnion: TransUnion provides consumer reports, insights and analytics, credit scores, and similar products and services to businesses and consumers. On April 12, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit alleging that TransUnion for the past several years violated a 2017 enforcement order requiring it to stop deceptive marketing. The CFPB said that in 2021 it received 150,000 complaints about TransUnion.
- Expeditors International of Washington Inc.: Expeditors International of Washington is a global logistics service company with an international network for moving goods. It purchases cargo space from airlines, ocean shipping lines, and trucking lines, and resells that space to customers. As part of its services, it offers customs brokerage, order management, and warehousing.
- Builders FirstSource Inc.: See company description above.
These are the industrial stocks that had the highest total return over the past 12 months.
| Industrial Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Carlisle Companies Inc.(CSL) | 259.46 | 13.5 | 49.1 |
| Quanta Services Inc. (PWR) | 137.84 | 19.7 | 47.4 |
| Paychex Inc. (PAYX) | 139.63 | 50.4 | 46.6 |
| Russell 1000 Index | N/A | N/A | 6.4 |
| Industrial Select Sector SPDR ETF (XLI) | N/A | N/A | 2.0 |
Source: YCharts
- Carlisle Companies Inc.: Carlisle Companies is a global manufacturer of a broad range of engineered products range for customers in commercial aerospace, defense electronics, medical devices, industrial, and buildings. It makes products for residential, commercial, and industrial buildings, including single-ply roofing, rigid foam insulation, architectural metal, heating, ventilation, and air conditioning, and vapor barrier systems.
- Quanta Services Inc.: Quanta Services provides infrastructure services on a contract basis to major customers in industries including telecommunications, electric and gas utility, energy, cable, government, and other areas. The company provides engineering, procurement, construction, and repair and maintenance services for infrastructure to companies in these industries. On March 31, the company announced a quarterly cash dividend of $0.07 per share. The dividend is payable on April 18 to shareholders of record as of April 11.
- Paychex Inc.: Paychex provides human resources software and services including payroll processing, retirement benefits, and insurance. Its clients include small- and medium-sized businesses. On March 30, the company reported results for Q3 FY 2022, ended Feb. 28. Net income jumped 23% as total revenue grew by 14.8% YOY for the quarter, driven by a strong selling season and high levels of client retention, among other factors.
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