Wall Street seems to gravitate toward shiny new things. Investors big and small love to chase hot new technologies or trends that promise to upend our lives and change society.
While investing in cutting-edge technologies such as blockchain and artificial intelligence can be exciting, it carries a lot of risk. As many crypto investors found out the hard way, what goes up quickly can come down just as fast. So, today, we’re going to focus on “boring” industrial stocks to buy.
While it may not be the most exciting, investing in industrial companies that have been around for decades and make boring but essential products needed to keep society operating efficiently can be extremely profitable. You might be surprised to learn that industrial stocks often outperform the market over the long run with less volatility.
While not flashy, the industrial stocks to buy below could give a real boost to your long-term portfolio.
Illinois Tool Works (ITW)
Illinois Tool Works (NYSE:ITW) has essentially been doing the same thing for more than 100 years. Since its founding in 1912, the company has been making products that help with construction and industrial output.
This includes manufacturing everything from nail guns and welding torches to fasteners such as screws, bolts and nuts, as well as powertrain components for motor vehicles. Illinois Tool Works has around 45,000 employees and generates annual revenue of nearly $16 billion.
Given its focus on the construction and industrial sectors, Illinois Tool Works is a cyclical stock that tends to perform best when the economy is doing well. However, despite mounting concerns of a potential recession, shares have outperformed over the past year, gaining 11.6% compared with a 6.5% loss for the S&P 500. Over the past 10 years, ITW is up 288% versus 160% for the broader market.
Another reason for investors to put ITW on their list of industrial stocks to buy is its dividend. The company is a dividend king, having raised its dividend for 59 consecutive years. With a quarterly payout of $1.31 per share, the stock yields 2.3%.
United Rentals (URI)
Speaking of industrial stocks to buy that have outperformed, how about United Rentals (NYSE:URI)? The equipment rental business has been very good to United Rentals and its shareholders. The Connecticut-based company’s share price has increased 34% this year, 50% over the past 12 months, and 151% in the past five years.
The company owns the largest rental fleet in the world with 4,600 classes of equipment for rent collectively valued at nearly $20 billion. It rents construction equipment such as forklifts, backhoes, bulldozers and excavators. United Rentals also rents out plumbing and HVAC equipment, as well as portable toilets that are used on job sites.
United Rentals has nearly 25,000 employees and generated $11.6 billion in revenue for 2022. In addition to operating in every region of the U.S. and Canada, United Rentals is expanding across Europe, as well as in Australia and New Zealand. The $1.2 trillion infrastructure bill signed into law in the U.S. last year is expected to be a boon for the company.
Most investors haven’t heard of Amphenol (NYSE:APH). And that’s understandable since the company has scant analyst coverage and gets almost no media coverage. Yet, the Connecticut-based company has been a very good investment for a very long time.
The company got its start in 1932 as the American Phenolic Corporation making tube sockets for radio tubes, which, at the time, were considered to be cutting edge. During World War II, the company became the primary manufacturer of connectors used in the Allied forces’ airplanes and radios. Today, the company produces coaxial cables and fiber optic connectors. Basically, Amphenol makes the nuts and bolts that keep our tech devices running smoothly.
While the company flies under the radar, it is a major corporation with more than 90,000 employees and 2022 sales of $12.6 billion. Best of all, APH stock has been a steady outperformer. Over the past 30 years, the stock has gained more than 32,000%, averaging an annual gain of more than 20%.
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Source: Investor Place