In this article, we will discuss: 10 Best Industrial Machinery Stocks to Buy Now.
Industrial stocks form the backbone of the American economy, encompassing companies that manufacture and maintain equipment used in the construction and manufacturing markets, such as compressors, turbines, and hydraulic systems. Their presence in the Dow Jones highlights their significance in the market.
According to Global Market Insights, the industrial machinery market, which was valued at $693.7 billion in 2023, is projected to grow at a compound annual growth rate of 7.5% between 2024 and 2032 as a result of the increasing application of automation and smart technologies, which significantly boost efficiency and production. Material handling and robotics are two important industries driving this expansion since they are essential to contemporary industrial operations.
Regionally, the Asia-Pacific area is driving this expansion as per the aforementioned research, with growing industrialization in countries like China and India. In terms of country, the United States is leading the North American industrial machinery market in terms of revenue, with an estimated 2023 revenue of $246.5 billion and a projected 2032 revenue of $402.9 billion. Moreover, North America accounted for 45% of the industrial machinery market in 2023.
Looking ahead, according to Deloitte’s Manufacturing Industry 2024 Outlook, the manufacturing sector is utilizing the Infrastructure Investment and Jobs Act, CHIPS Act, and Inflation Reduction Act to boost growth through improved semiconductor manufacturing and construction. Digital transformation is still essential in spite of economic challenges and a lack of skilled workers. Industrial metaverse capabilities are being integrated into smart factory systems, which are 12% more productive and cited by 86% of manufacturing leaders as essential for competitiveness. A game-changer, generative AI reduces labor restrictions while improving supply chain efficiency and product design.
That said, according to Interact Analysis’s Manufacturing Industry Output Tracker (MIO), which Industrial Machinery Digest released on May 30, 2024, the global manufacturing industry is predicted to grow by just 0.6% in 2024, showing stagnation or minor decline in the majority of regions. The study mentioned that China’s growth estimate was reduced from 2.8% to 2.4%, pointing out economic issues that may affect its 50% global manufacturing share. Although a slight decline is predicted in 2026 before a consistent rise through 2028, a recovery is projected in 2025 as global conditions improve. While Taiwan, South Korea, and Singapore benefit from the semiconductor resurgence, the United States exhibits stronger manufacturing fueled by rising consumer expenditure and moderating inflation. Challenges include the slowdown in European manufacturing and pressures on the machinery market caused by high loan rates, which increase costs and reduce order intake. High living expenses still limit demand even though post-Covid supply chain problems have decreased.
Adrian Lloyd, CEO of Interact Analysis, made the following comment in Manufacturing Industry Output Tracker (MIO):
“The global outlook for manufacturing output is mixed to say the least. Our projections are holding but there are no clear signs of where recovery will come from and how strong it will be. As a result, we will be watching closely to see how constrained consumer spending in China, a strengthening US economy and global events will affect conditions.”
He further added:
“The machinery market appears to be experiencing more challenging conditions than manufacturing overall, as global uncertainty leads to caution around investment in equipment.”
Data from the Federal Reserve in October revealed that U.S. industrial production dropped in September, largely due to reduced factory output influenced by a strike at Boeing Co. and the impact of two hurricanes. Production across factories, mines, and utilities declined by 0.3%, following a revised 0.3% increase in the previous month. However, the industrial sector of the broader market has risen by 22.4% since the beginning of the year.
With that said, here are the 10 Best Industrial Machinery Stocks to Buy Now.
A close-up of a large industrial compressor in the oil and gas industry.
Methodology:
We sifted through holdings of Industrial Machinery ETFs and online rankings to form an initial list of 20 industrial machinery stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024, according to Insider Monkey’s database. We have used the stock’s revenue growth (year-over-year) as a tiebreaker in case two or more stocks have the same number of hedge funds invested.
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10. Pentair plc (NYSE:PNR)
Number of Hedge Fund Holders: 40
Pentair plc (NYSE:PNR), which employs 10,000 employees and has operations in 25 countries, is a major player in the water treatment industry worldwide. Pentair is divided into three business segments: flow, water technology, and pools. The company provides a variety of water solutions, such as commercial and industrial pumps, filtration solutions, and energy-efficient swimming pool equipment. Over 75% of the company’s products are replacements, and it benefits from a large installed base of equipment.
Since the start of 2024, the stock has surged by nearly 50%. Pentair plc (NYSE:PNR) has constantly exceeded EPS and revenue estimates, with a share price growth of more than 68% over the last year, beating the broader market. Given that cash reserves rose dramatically over the past year and net debt dropped by $545 million, the company’s debt strategy is impressive.
Pentair plc (NYSE:PNR) delivered a strong Q3 2024 and created record-free cash flow so far this year. For Q3 2024, its operating cash flow came in at $249 million, up $86 million YoY, and $234 million in free cash flow, up $90 million YoY. Moreover, the company raised its adjusted EPS outlook to around $4.27 and updated its full-year 2024 GAAP EPS guidance to about $3.70.
The company has shown its strong commitment to providing value to shareholders by increasing dividends for 48 years in a row and is on its way to becoming a dividend king.
On October 3, 2024, Scott Graham, an analyst at Seaport Research, raised the company’s price objective from $110 to $120 while sticking to a buy recommendation for the shares. The analyst informs investors that the company’s Q3 2024 adjusted EPS exceeded the estimate and was higher year over year. According to the company, it is “rolling along,” generating robust earnings growth, meeting EPS guidance, and doing so with minimal assistance from its primary verticals.
Pentair plc’s (NYSE:PNR) strategic emphasis on its water portfolio, along with excellent cost management and transformation operations, positions the company well for future growth.
Ian Simm’s Impax Asset Management was the largest shareholder in the company among the funds in Insider Monkey’s database, with 7,618,725 shares worth $743.46 million.
9. AMETEK, Inc. (NYSE:AME)
Number of Hedge Fund Investors: 41
AMETEK, Inc. (NYSE:AME) is a diverse industrial giant that generates over $6 billion in revenue annually. EIG makes significant profits by designing and producing unique and cutting-edge instruments for the process, aerospace, power, and industrial end sectors. Among its many products, EMG is a specialized and targeted supplier of electrical interconnects, specialty metals, thermal management systems, and highly developed automation solutions.
The United States accounts for the majority of the company’s sales. The AMETEK, Inc. (NYSE:AME)’s asset-light strategy, which has been in effect for about 20 years, places a strong emphasis on expanding globally and in new markets, generating new products through research and development, and growing through acquisitions.
AMETEK, Inc. (NYSE:AME) stated on October 31, 2024, that it has paid an undisclosed sum to buy Virtek Vision International, a Canadian supplier of innovative laser-based projection and inspection equipment.
AMETEK, Inc. (NYSE:AME)’s operational efficiency and margin performance are its strongest points. In Q3 2024, the firm showed solid results, including double-digit order growth, exceptional operating performance, remarkable cash flow conversion, and earnings that exceeded projections. AMETEK reported a 5% YoY increase in sales during the third quarter of 2024. During the quarter, operating margins were 26.1%, while operating income rose by 2% to $445.9 million. The quarter’s operating cash flow was $487.2 million, up 3% from the previous year, and the free cash flow to net income conversion was 135%.
Following the Q3 release, Brett Linzey, an analyst at Mizuho on November 1, 2024, maintained an Outperform rating on AMETEK, Inc. (NYSE:AME) and increased the firm’s price objective from $190 to $200. The firm cites higher estimate revisions and balance sheet deployment credit as the company’s “deal engine chugs on” to achieve the target rise.
Seth Cogswell’s Running Oak Capital owned the largest stake in the company, according to Insider Monkey’s database. It owns 74,291 shares worth $12.76 million as of Q2.
8. PACCAR Inc (NASDAQ:PCAR)
Number of Hedge Fund Investors: 42
PACCAR Inc (NASDAQ:PCAR) is a prominent producer of medium- and heavy-duty trucks under the high-end brands DAF (sold in Europe and South America) and Kenworth and Peterbilt (mostly sold in the NAFTA region and Australia). Globally, the firm sells its trucks through over 2,300 independent dealers. Paccar Financial Services offers dealers and consumers retail and wholesale finance, respectively. The company holds about 17% of the heavy-duty market share in Europe and 30% of the Class 8 market share in North America.
Trucks from PACCAR Inc (NASDAQ:PCAR) are among the best-performing, longest-lasting, and most fuel-efficient vehicles available. These elements have contributed to the company’s solid image as a brand among truck drivers and fleet owners. The company benefits from a large vocational truck market share and infrastructure developments, as well as no industrial debt and a constant, increasing dividend return.
On October 23, 2024, Truist raised its price target on PACCAR Inc (NASDAQ:PCAR) from $103 to $107. Although the company’s Q3 earnings exceeded consensus projections, the analyst informs that its gross margins were low at 16.6% compared to the management’s guidance of 17.0% due to improved truck deliveries of 44.9K versus its forecast of 43K-44K. Price costs are still hurting Truck and Parts margins, just like they were in the previous quarter, the company stated.
Nonetheless, according to analysts, during periods of strong freight demand and profitability, fleet owners can replace older vehicles, increasing PACCAR Inc (NASDAQ:PCAR)’s new truck orders and revenues.
John Murphy’s Levin Easterly Partners was the company’s leading stakeholder among the funds in Insider Monkey’s database. It owns 7,275 shares worth $717,897 as of Q2.