In this article, we will discuss the 10 Best Industrial Stocks to Invest in Now.
Industrial stocks were on a roll in 2024 as the overall sector ended the year up 26% on navigating deteriorating economic conditions, geopolitical uncertainty and heightened inflation. At the same time, a slowing Chinese economy was expected to hurt sentiments in the sector, but that was not the case.
Fast forward, the outlook in the industrial sector remains optimistic despite growing concerns about trade tariffs that could affect deals and operations. US President Donald Trump has threatened to impose a new 25% tariff on all steel and aluminum imports.
Trump’s trade policy overhaul would involve a significant increase in tariffs on top of the current metals duties. According to data from the American Iron and Steel Institute and the government, South Korea, Vietnam, Brazil, and Canada are the top three countries from which the United States imports steel. As a result, the tariffs have the potential to shake the nation’s industrial sector.
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“Canadian steel and aluminum support key industries in the U.S. from defense, shipbuilding and auto. We will continue to stand up for Canada, our workers, and our industries,” Canadian Innovation Minister Francois-Philippe Champagne posted on X.
Nevertheless, there is growing optimism that a return of manufacturing to the US from other countries amid the trade tariffs would be a boon for the sector. Activities in the industrial sector are expected to improve significantly amid the growing push to reinvest in domestic infrastructure.
The need to bring supply chains onshore to avert the ever-growing geopolitical risk is another factor that should bolster sentiments in the industrial sector. Additionally, heightened investments in electrification and the development of artificial intelligence should also have a positive impact. The fact that only a quarter of the $1.9 trillion worth of projects announced since 2020 have entered into the construction phase underscores the tremendous opportunities around industrial stocks.
The expected surge in spending on domestic manufacturing under the new administration should greatly benefit equipment rental specialists’ electrical equipment companies, among others. The commercial aerospace sector is another segment expected to be on a roll after years of slowdown following the COVID-19 pandemic. A shortage of new planes as travel recovers is presenting tremendous opportunities for companies in the aerospace segment.
Interest rate cuts as part of an effort to steer the economy into a soft landing is another tailwind that should positively impact the industrial sector in 2025. Lower interest rates are expected to stimulate the housing sector on mortgage dropping, therefore attracting more home buyers. The net effect should be a strong demand for building materials and equipment that benefit construction companies and those in the repair and remodeling business.
Additionally, the industrial sector could receive a significant boost from China coming through on a new economic stimulus and major structural changes. Such a move is expected to boost activities in the sector and increase demand for raw materials and equipment, which should bolster the industrial sector.
“The sentiment around the China market obviously has been pretty poor, not just recently, but for some time now. I think investors are ignoring some of these positive developments,” said Andrew Swan, head of Asia equities at Man Group
Trump’s trade policies, lower interest rates, and China’s economic stimulus are some of the tailwinds likely to impact the global industrial sector positively. A resilient US and global economy that steers clear of recession amid low interest rates are some of the reasons to be optimistic about the overall industrial sector outlook.
Stock market data. Photo by Jakub Zerdzicki on Pexels
Our Methodology
We scanned the US stock market using a screener and analyzed online rankings to compile the list of the 10 best industrial stocks to invest in now. We filtered out those with high hedge fund holdings from an initial list of 25-30 stocks. The final stocks are arranged in ascending order of hedge fund sentiments as of Q3 2024. We also focused on stocks with strong fundamentals and significant long-term investment potential.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Industrial Stocks to Invest in Now
10. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 41
Deere & Company (NYSE:DE) is an industrial company that manufactures and distributes equipment worldwide. It provides large and medium tractors, cotton pickers and strippers, sugarcane harvesters and loaders. While the stock underperformed the overall market on rallying by 20% in 2024, it is already up by 11%.
Even as Deere & Company (NYSE:DE) faced significant market challenges in 2024, it adjusted its business operations and performed structural improvements to serve customers effectively and achieve strong results. Likewise, it generated a net income of $7.1 billion and earnings of $25.62 per diluted share for fiscal 2024, as net sales dropped 28% to $11.14 billion.
In order to manage used equipment stocks, the company is collaborating closely with dealers and has drastically decreased its inventory of new equipment. Technological innovations have been widely adopted, such as the See and Spray technology, which covers more than one million acres, as Deere looks to strengthen its long-term prospects. Additionally, Deere & Company (NYSE:DE) has a big global business edge that should allow it to shrug off the negative effects of US trade tariffs.
Parnassus Investments, an investment management company, released the Q2 2024 investor letter. Here is what the fund said:
“Deere & Company (NYSE:DE) stock dropped after the company released underwhelming fiscal second-quarter earnings and lowered its 2024 guidance. Although the company is going through an equipment demand downturn, we believe it will demonstrate better-than-expected through-cycle performance.”
9. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 50
Caterpillar Inc. (NYSE:CAT) is an industrial company that manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. As a cyclical investment play, the company benefits whenever spending on construction, mining, energy, and transportation equipment increases.
Likewise, Caterpillar Inc. (NYSE:CAT) finds itself on edge with Donald Trump threatening a 25% tariff on goods from Mexico and Canada, whereby it maintains significant operations. Restrictive trade tariffs have the potential to affect Caterpillar’s core business. However, chief executive officer Donald Umpleby believes the company is well positioned to shrug off the negative trade policies given that the company maintains the largest manufacturing presence in the US. Additionally, it generates nearly half of its revenues in North America.
Caterpillar Inc. (NYSE:CAT) has shown excellent margin performance in spite of difficulties with sales volume, suggesting superior cost control and operational efficiency. In comparison to earlier projections, analysts are projecting a 60 basis point boost in margins for the second half of 2025, which would help the full-year EPS. Significant destocking initiatives are also being pursued, with plans to cut inventory by $1 billion by the second half of 2025.
Diamond Hill Capital, an investment management company, released its “Large Cap Strategy” third-quarter 2024 investor letter. Here is what the fund said:
“Other top Q3 contributors included HCA Healthcare and Caterpillar Inc. (NYSE:CAT). Heavy construction machinery manufacturer Caterpillar has held up better than industry peers against a challenging macroeconomic backdrop and a generally slowing construction environment.”
8. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 52
The Boeing Company (NYSE:BA) is an aerospace and defense giant that designs, develops, and sells commercial jetliners, military aircraft, satellites, missile defense, and launch systems. The industrial stock battered amid safety concerns over its planes is showing signs of bottoming out after years of underperformance. While the stock was down by about 15% in 2024, it is up by about 5.8% in 2025.
The significant stock gain in 2025 comes from the Boeing Company (NYSE:BA) making headway in its recovery, notably by concentrating on core operations and boosting output after years of safety and manufacturing issues. Its 737 MAX deliveries are on course to reach the upper 30 a month from 17 as of the end of last year.
Additionally, The Boeing Company (NYSE:BA) is on course to turn cash flow positive in the second half of the year, affirming improved operational efficiency and strong demand for its products. While the company burnt about $14 billion, its cash flow should receive a boost amid higher production rates, including producing 38 airplanes a month. The company’s long-term prospects as an industrial juggernaut remain solid, going by the half-a-trillion-dollar backlog amid soaring airline orders.
7. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Investors: 54
Waste Management, Inc. (NYSE:WM) is a unique industrial company that provides waste management solutions. It offers collection services, including picking up and transporting waste and recyclable materials to a transfer station. After rallying 18% in 2024, the stock is already up by 12% for the year, affirming strengthening underlying fundamentals.
Waste Management, Inc. (NYSE:WM) had an impressive 2024 as its revenue surged 8% and 13% in the fourth quarter. Likewise, net income was up 19% in the year and 21% in the fourth quarter. Waste Management is one of the best industrial stocks to buy as it expects revenues to grow by 16% in 2025. It also expects its free cash flow to increase by 18%. The nature of the company’s business underscores why it is a resilient stock, given that there will always be waste to manage regardless of the prevailing economic situation.
Additionally, Waste Management, Inc. (NYSE:WM) has moved to strengthen its long-term prospects by acquiring Stericycle. The acquisition is poised to expand its service offering in the waste management business and diversify its revenue streams. The company has also been aggressive on the acquisition front, spending about $750 million to strengthen its competitive edge. The acquisitions are expected to bolster the annualized revenue base by about $300 million.
6. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Holders: 55
FedEx Corporation (NYSE:FDX) is an integrated freight & logistics company that provides transportation, e-commerce, and business services. The company’s core business has been under pressure post-pandemic, with revenues dropping 7% from $93.5 billion in 2022 to about $87 billion in 2023. The decline can be attributed to, among other things, decreased e-commerce activity post-pandemic, inflationary pressures, and weakening international shipping.
Nevertheless, the industrial company’s long-term prospects remain solid as inflationary pressures have subsided significantly with the cutting of interest rates. It is one of the best industrial stocks to invest in now as it is well-positioned to benefit as e-commerce expands and the need for package delivery increases. FedEx Corporation (NYSE:FDX) has also moved to strengthen its growth metrics with plans to divest its freight division. The spinoff should allow the company to focus on its core package delivery business.
Grand View Research projects that until the end of the decade, the global courier, express, and parcel markets will expand at a compound annual growth rate of 10.6%. Regardless of what occurs in the short term, a dominant position in the market indicates FedEx Corporation (NYSE:FDX) has much more growth ahead of it.
5. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 55
Honeywell International Inc. (NASDAQ:HON) is an industrial company that engages in aerospace technologies, building automation, energy and industrial automation businesses. There is no doubt that the company has been a big disappointment in recent years struggling to convert opportunities in automation, the industrial Internet of Things, and aerospace into meaningful top-and-bottom-line results.
However, there are still reasons to be optimistic about the company’s long-term prospects as an industrial investment play. The company has conducted $10 billion worth of acquisitions since 2023 to unlock new growth opportunities. It is also in the process of reducing its share count to enhance earnings per share as part of a $22 billion share buyback program. Additionally, Honeywell International Inc. (NASDAQ:HON) is streamlining its capital-intensive balance sheet with the spinoff of its industrial heavyweight aeronautics division.
Activist investor Elliott Management, which has acquired $5 billion worth of shares in Honeywell International Inc. (NASDAQ:HON), is also pushing for strategic changes aimed at unlocking more shareholder value.
4. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 57
Delta Air Lines, Inc. (NYSE:DAL) is an industrial company that provides scheduled air transportation for passengers and cargo. It was one of the best-performing industrial stocks, rallying by 71% in 2024, a momentum that shows no signs of slowing down, going by a 16% gain in 2025. The outperformance stems from the company’s better-than-expected financial results, attributed to strong travel demand.
Revenue in 2024 surged to $14.44 billion, topping consensus estimates of $14.18 billion. Earnings per share came in at $1.85, above analysts’ estimates of $1.78%. Delta Air Lines, Inc. (NYSE:DAL) expects the momentum of better-than-expected results to continue in 2025. The airline expects revenues to increase by 7% to 9% in 2024. It also expects more than $4 billion in free cash, up 18% from 2024. It expects annual adjusted earnings of more than $7.35 per share for the entire year.
Two factors favor Delta Air Lines, Inc. (NYSE:DAL) and its potential for earnings growth. The first is the rise in non-main cabin ticket sales, which includes premium cabin sales and American Express’s compensation from co-branded credit cards. The second stems from a recently established airline industry discipline about capacity reduction when needed. American Express’s compensation has also increased from $2 billion in 2010 to an estimated $7 billion in 2024, with management aiming to eventually reach $10 billion. In addition to diversifying Delta’s revenue, the SkyMiles program and credit cards foster consumer engagement and loyalty.
3. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 58
Lockheed Martin Corporation (NYSE:LMT) is a security and aerospace company that researches, designs, develops, manufactures and integrates technology systems. It is one of the best industrial stocks to invest in.
Additionally, Lockheed Martin Corporation’s (NYSE:LMT) highest-margin business is fire control and missiles, expected to grow at the fastest rate over the coming years. In 2024, Lockheed Martin’s backlog reached record highs of $176 billion, affirming the solid revenue base. The future earnings potential is still high due to initiatives like the F-35 and classified projects, which point to sustained high demand.
Lockheed Martin Corporation (NYSE:LMT) has placed a great deal of emphasis on its classified programs and technological advancements in hypersonics. To bring these projects into production phases and provide long-term growth opportunities, the initiatives are expected to strengthen the company’s prospects in the defense industry.
2. Parker-Hannifin Corporation (NYSE:PH)
Number of Hedge Fund Holders: 62
Parker-Hannifin Corporation (NYSE:PH) is a specialty industrial machinery company that manufactures and sells motion and control technologies and systems for mobile, industrial, and aerospace markets. The industrial stock has consistently outperformed the overall market, going by a 34% gain in 2024. Likewise, the stock is already up by about 9%.
The stellar performance stems from Parker-Hannifin Corporation’s (NYSE:PH) ability to navigate industrial downturns. It has also experienced steady growth due to acquisitions and a stronger emphasis on long-lasting products that capitalize on secular trends like electrification and digitization. Parker Hannifin’s dominance of motion and control technologies supports its solid market position. The company has a competitive advantage due to its substantial presence in the aerospace industry, particularly given the continued strength of the commercial aerospace cycle.
Over the past ten years, Parker-Hannifin Corporation (NYSE:PH) has effectively diversified its portfolio, lowering its susceptibility to changes in specific markets. In particular, the aerospace sector is expected to continue growing. Even though double-digit growth rates might not last forever, the performance of this segment is well-supported by the robust commercial cycle. Analysts predict that between 2024 and 2027, the organic growth CAGR will be 6.7%, while the operating margin will increase by 268 basis points during that time.
1. 3M Company (NYSE:MMM)
No. of Hedge Fund Holders: 82
3M Company (NYSE:MMM) provides diversified technology services. It offers industrial abrasives and finishing for metalworking applications and auto body repair solutions. After rallying by more than 90% last year, the stock is still edging higher, affirming firm investor conviction about its long-term prospects.
The company’s sentiments and prospects have improved significantly following a restructuring drive focused on the spin-off of the healthcare business, job cuts, changing 3M Company’s (NYSE:MMM) global go-to-market approach, and reducing management layers. Additionally, 3M has seen its growth metrics improve significantly owing to increased focus on research and development followed by improving operational performance and deployment of capital.
The efforts are already paying off, given that the operating margin has improved from 18.6% in 2023 to 21.4% as of last year. Earnings per share was up by 21%. In addition, management predicts a 2% to 3% growth in organic sales in 2025, with the operating margin improving to 23.3%, at the back of a 100% free-cash-flow conversion rate. Earnings growth is expected to be accelerated in the upcoming years by an enhanced R&D pipeline, a renewed emphasis on 3M Company’s (NYSE:MMM) industrial business, and numerous operational improvements.
While we acknowledge the potential of 3M Company (NYSE:MMM) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MMM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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