If you aren’t at least considering industrial stocks these days, you may be leaving some great returns on the table.
Industrial stocks are those representing companies that handle the manufacturing, production and distribution of goods and services. That includes things like machinery, equipment and chemicals. Or it can mean services like logistics and construction.
Industrial stocks also do well when there’s plenty of infrastructure spending, and that’s something that will continue for the next several years. President Biden signed a $1 billion infrastructure bill into law in December 2021.
That money will include funds to upgrade roads, bridges and transit systems, build out the nation’s electric vehicle charging network and make high-speed internet available from coast to coast.
It will take years for all the spending and construction to occur, so you still have plenty of time to take advantage of this headwind. Here are seven stocks that can help you on your way.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) is a leading manufacturer of construction and mining equipment. It also makes diesel and gas engines, industrial turbines and more.
Its yellow logo is synonymous with construction, and it’s one of the first companies that anyone will think of when building out infrastructure.
The major number to watch with Caterpillar is its Machinery, Energy and Transportation (ME&T) division, which makes up the company’s construction, resource, energy and transportation and other segments.
ME&T revenue rose from $39.02 million in 2020, during the Covid-19 pandemic, to $56.57 million last year. That outpaces the revenue that CAT was seeing before the pandemic as well.
For the second quarter of 2023, CAT reported overall revenues of $17.3 billion, up 22% from a year ago; and EPS of $5.67. ME&T revenues were $13.53 billion, up 22% from 2022.
Caterpillar stock is up 53% in the last 12 months and gets an “A” rating in the Portfolio Grader.
American Superconductor (AMSC)
American Superconductor (NASDAQ:AMSC) is a Massachusetts company that provides power solutions for private entities and public companies.
The company’s having an odd year, with the share price jumping more than 120% in August ahead of the company’s quarterly earnings report. That coincided with Tesla (NASDAQ:TSLA) CEO Elon Musk speculating in the Wall Street Journal that rising electrical demand could cause electricity use to triple in the U.S. by 2045.
You’ve got to hand it to Musk. Like him or hate him, the man can move the market when he talks.
AMSC gave back most of those gains in the last month, but the stock price is still up 105% in 2023.
For the fiscal Q1 2023 ending June 30, AMSC reported revenues of $30.3 million, up from $22.7 million a year ago. The company reported a net loss of $5.4 million and 19 cents per share, but that’s an improvement over a year ago when it lost $8.7 million and 32 cents per share.
AMSC stock has an “A” rating in the Portfolio Grader.
Symbotic (SYM)
Staying in Massachusetts, we have Symbotic (NASDAQ:SYM) a company that creates elaborate systems that allows companies to manage their warehouses with a robotic system.
The company is also incorporating AI into its warehousing platform to make it more efficient and flexible.
Walmart (NYSE:WMT) uses Symbotic’s warehousing platform in some of its facilities to automate its processes. Symbotic also has a relationship with Softbank (OTCMKTS:SFTBY) to launch a joint venture called GreenBox Systems. The project would create a warehouse-as-a-service to automate supply chains. That alone is a $500 billion opportunity.
SYM stock showed earnings for its fiscal third quarter as $312 million, up from $176 million a year ago.
Symbotic has a backlog of $23 billion and the stock is up 170% this year. It gets an “A” rating in the Portfolio Grader.
Huadi International Group (HUDI)
Huadi International Group (NASDAQ:HUDI) is a Chinese company that develops steel products including stainless steel pipes, tubes and steel bars. Its products are used in the transmission of oil and gas, food processing, medical devices, construction, automotive, and mechanical industries.
This is a small company with a market cap of only $50 million. And the stock price has been up and down this year, with one glaring exception in May when it jumped more than 100% in a day before tumbling on no particular news.
There was another incredible jump late last year when Huadi announced it was entering the clean energy space, sending shares from the mid-$20s to more than $200. But then Huadi moved to dilute shares by raising capital in a direct offering, and the stock tumbled again.
Earnings for the first half of 2023 included $38 million in revenue, up 3.2% from a year ago. And the company turned a profit, earning 10 cents per share versus a loss of 1 cent per share a year ago.
You’re going to have some volatility with stocks this small, but as I’ve said before, I think Huadi is one of the more interesting micro-cap picks you can make if you have some risk tolerance.
HUDI stock has an “A” rating in the Portfolio Grader.
Paccar (PCAR)
Paccar (NASDAQ:PCAR) makes heavy-duty and medium-sized trucks under the Kenworth, Peterbilt and DAF brands.
It has more than 2,200 dealers and also operates a parts distribution center for aftermarket customers.
The company also has a financial services division that supplies financing and leasing for 180,000 vehicles.
Paccar’s role in infrastructure and industry is to keep the supply chain moving, providing vehicles so companies can ship supplies and products from coast to coast. According to the American Trucking Association, trucks handled $940.8 billion in gross freight revenues in 2022.
Paccar said it set a company revenue for its Q2 earnings report, bringing in $8.88 billion in revenue and $1.22 billion in income, up from $7.16 billion in revenue and $720.4 million in income a year ago.
PCAR stock is up 30% in 2023 and it gets an “A” rating in the Portfolio Grader.
Aehr Test Systems (AEHR)
Aehr Test Systems (NASDAQ:AEHR) makes burn-in equipment in silicon carbide semiconductor chips. They’re commonly used in electric vehicles, so the demand is only going to increase.
More than 10 million EVs were sold last year, and projections are for a 35% increase in 2023. By 2023, EV sales in China, the European Union and the U.S. are expected to increase by 60%.
The problem with Aehr is that Tesla already announced that its new power inverter will reduce its use of silicon carbide. Aehr says that won’t impact the company, but investors should still be aware.
Revenue for the fiscal Q4 2023 (ending May 31, 2023) was for revenue of $22.3 million up from $20.3 million the previous year. Income of $6.1 million equaled EPS of 20 cents per share. For the full year, the company had revenue of $65 million, a new full-year high. It also had income of $14.6 million, or 50 cents per share.
Aehr guided for full-year growth in fiscal 2024 of 50%, topping $100 million. It also says it has a backlog of $39.7 million in orders, so the money should continue to flow in.
AEHR stock is up 141% this year and gets an “A” rating in the Portfolio Grader.
Coda Octopus Group (CODA)
If you need to build something or find something underwater, then Coda Octopus Group (NASDAQ:CODA) may be the ones to call.
The Florida-based company makes products used in the underwater construction market, offshore oil and gas, wind energy, port security and mining sectors.
The company’s 3D sonar is the only commercial product that can provide real-time imaging and can be used to salvage sunken vessels or provide additional awareness and safety for underwater operations.
Coda Octopus caters to oil and gas companies, law enforcement, ports and mining companies, and its marine engineering business services are primarily used by defense contractors.
The company has several projects with the U.S. Navy and is angling for more. As long as it can continue to grow its defense network, Coda should be a good buy.
CODA gets an “A” rating in the Portfolio Grader.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place