Many of the top Wall street analysts are bullish on value sectors like the industrials, and it’s easy to see why. With interest rate hikes on the way and extreme price drops in high valuation names, industrial equities could be poised to outperform in 2022, and they are already displaying signs of progress amid a volatile market environment. There's a lot to like about industrial stocks, given the prospects of an improving economy, as many of these businesses tend to perform well during periods of growth..
While all signs point to a lucrative year for this industry, investors must be picky when putting their money into play at this time. Here is a list of 3 attractive industrial stocks to buy now to help you narrow your focus towards the best in breed.
These businesses all have a healthy financial position, a proven business model, and appealing earnings that make them excellent choices to explore now.
Caterpillar (NYSE: CAT)
For a variety of reasons, this large builder of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric railcars is an intriguing stock. Caterpillar's role in rebuilding the country's crumbling infrastructure over the next several years should be a major consideration. The United States government is dedicated to investing significantly in upgrading roads, bridges, rails, electricity, and other infrastructure projects, and Caterpillar's heavy equipment will play an important part in achieving that goal.There's a lot to like about Caterpillar, which has exposure to mining and energy markets, which have been strong lately and could contribute to future earnings.
Caterpillar is also a fascinating industrial stock because it is a dividend aristocrat, indicating how well-managed and financially solid the company is. The stock pays a 2% dividend, and for 28 years in a row, it has delivered greater yearly dividends to investors. Finally, the fact that the firm generated Q3 sales and revenue of $12.4 billion, up 25 percent year-over-year, depicts a company that is benefiting from several market forces including strong demand and price realization.
Builders Firstsource (NYSE: BLDR)
Many investors are aware of the significant supply imbalance in the residential real estate market, which is a compelling incentive to consider Builders Firstsource. It's a major supplier of construction materials, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and renovation. Builders Firstsource and its shareholders should benefit from the trend of homebuilders attempting to construct as many new homes as possible for years to come, which is a good sign.
It's a one-stop shop for all manufacturing, supply, delivery, and installation requirements because it offers its clients with an integrated homebuilding service.Even after a sharp ascent in 2021, the stock is still priced attractively, with a forward P/E ratio of 8.96. Builders Firstsource reported net sales of $5.5 billion in Q3, up 140% from the previous year, as well as Adjusted EBITDA growth of 244.4% to $975.9 million. This is certainly an intriguing industrial stock to look at right now, with a lot of tailwinds working in its favor and earnings growth that is impressive.
Delta Airlines (NYSE: DAL)
Delta Airlines is one of the most appealing stocks in the industrial sector if you're seeking for a long-term investment with significant upside potential. Despite the fact that the airline sector is still recovering from a harsh few years as a result of the global pandemic, it's critical for investors to remember that many of these concerns will only be temporary. We're already seeing indications of a recovery in travel demand, and though the current wave of COVID-19 instances is undoubtedly a concern, travel restrictions are likely to lighten up again in the Spring as case counts fall. To quote the company’s CEO, Ed Bastian,
“Omicron is expected to temporarily delay the demand recovery 60 days, but as we look past the peak, we are confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel.”
Delta has long been the industry's most prestigious brand owing to its strong balance sheet and ability to consistently attract business passengers throughout the years due to premium services and credit card partnerships. The firm surpassed fourth-quarter earnings expectations by more than 50%, and revenue projections by around 2%. If you're a long-term investor, keep an eye on the stock as it approaches reclaiming the 200-day moving average; if not, it's still a decent bargain at current levels.