Below we presented the list of 5 Best Industrial Stocks to Buy Now. For our detailed discussion and a more comprehensive list please see 12 Best Industrial Stocks to Buy Now.
5. Accenture Plc (NYSE:ACN)
No of HFs: 46
Total Value of HF Holdings: $1.14 Billion
The top hedge fund holder of this stock is Cliff Asness’ AQR Capital Management which had $293 million invested in the stock at the end of September. In Aoris Investment Management’s Q1 2020 investor letter, they talked about the stock.
“Accenture is the world’s largest IT consulting and outsourcing company. It has $6 billion of cash on its balance sheet and negligible debt. It has unusually stable management, with an average tenure of the top 5000 executives of 15 years. Accenture has an outstanding record over the last decade of consistently taking market share, drawing on its enormous benefits of size and scale and leadership.
Over the next 6–18 months, some of Accenture’s consulting engagements will likely be deferred. On the other hand, many of Accenture’s large private and public sector clients will emerge from this period with new problems to be solved, such as the IT infrastructure to better enable safe and productive working from home in the future. We expect Accenture to take market share at an accelerating rate and have additional opportunities for sensible bolt-on acquisitions that add discrete capabilities.”
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4. Old Dominion Freight Line, Inc. (NASDAQ:ODFL)
No of HFs: 47
Total Value of HF Holdings: $787 Million
At the end of the third quarter, a total of 47 hedge funds tracked by Insider Monkey were bullish on this stock. The top hedge fund holder of this stock is Cliff Asness’ AQR Capital Management which had $135 million invested in the stock at the end of September. Wedgewood Partners talked about ODFL in its Q2 2019 investor letter:
“We have decided to liquidate our holdings in Old Dominion Freight Lines in order to pursue opportunities elsewhere. We remain impressed with Old Dominion’s best-in-class business model and with the quality of its management team and operations, so we wouldn’t call this sale a vote against the Company. Results have been quite good while we have owned this company, although the market has lost interest in the broad transportation industry generally. Macroeconomic doubts, driven in large part by uncertain international trade dynamics, have weighed on sentiment. In addition, tremendously strong results from Old Dominion in 2018 – partially before we owned the company, and partially during our ownership – have created very difficult year-over-year comparisons. While, of course, this has been no surprise to us, we believe this also has weighed on sentiment to some degree.
As a reminder on 2018, the tremendous strength in Old Dominion’s business (which created difficult comparisons for 2019) was driven by a few issues above typical macroeconomic factors:
- Old Dominion, like other Less-than-Truckload (LTL) carriers, has significant industrial exposure, and changes to U.S. tax law at the beginning of 2018 drove incremental industrial strength and increased capital investment, both of which provided additional juice to Old Dominion’s already thriving industrial business.
- The extreme shortage of capacity in the Truckload (TL) industry, driven by Electronic Logging Device (ELD) mandate we’ve discussed extensively, actually caused some traditional Truckload business to slip into Less-than-Truckload, especially toward the end of 2017 and in the first half of 2018. This had been nearly unheard of in trucking previously. As the Truckload industry and its customers adjusted to the lower level of TL capacity over the course of several quarters, this particular anomaly has reverted to normal, with the overflow of capacity into LTL disappearing.
Unlike our holding C.H. Robinson, which has been and will remain a primary beneficiary of the shrinking capacity in the Truckload industry over the long term, the fundamental drivers of Old Dominion’s business model have been more purely cyclical in nature. As a result, we have chosen to retain our C.H. Robinson position while liquidating Old Dominion in favor of other recent buys and additions, such as Motorola Solutions and Ross Stores, both of which present growth opportunities which are less cyclical in nature.”
3. Copart Inc. (NASDAQ:CPRT)
No of HFs: 56
Total Value of HF Holdings: $1.07 Billion
CPRT is the 3rd best industrial stock to buy now. In Wedgewood Partners’ Q2 2020 investor letter they mentioned a few of their comments on the stock.
“Copart reported roughly flat revenues for its April ending quarter as the Company processed lower totaled automobile volumes at auction, likely due the decline in U.S. driving activity during COVID-19 stay at home orders. However, we believe U.S. driving activity bottomed sometime in mid-April and has recently returned to more normal levels, aided by a shift away from mass transit. We added to our Copart position as we think the market underestimates the recovery in auction volumes as a result of this rebound in U.S. driving activity.”
2. TransDigm Group, Inc. (NYSE:TDG)
No of HFs: 64
Total Value of HF Holdings: $6.12 Billion
The top hedge fund holder of this stock is Chase Coleman And Feroz Dewan’s Tiger Global Management LLC which had $834 million invested in the stock at the end of September. An insider purchased 1 share at around $600 in December 2020. The stock is down 7% since then. Vulcan Value Partners mentioned TDG in their Q2 2020 investor letter:
“TransDigm Group Inc. is an aerospace manufacturing firm that provides highly engineered, niche components for use on commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales. Most of its products are small volume, low cost items that are sole sourced from TransDigm. It is economically unlikely for a new company to compete on any particular product because volumes on individual components are not large enough to justify the investment in manufacturing facilities and regulatory approval. The company produces high levels of free cash flow, has long equity duration, a strong business model, and an effective, shareholder-oriented management team who are good capital allocators.”
1. Union Pacific Corporation (NYSE:UNP)
No of HFs: 74
Total Value of HF Holdings: $3.91 Billion
The best industrial stock to buy now is UNP. At the end of September a total of 74 of the hedge funds tracked by Insider Monkey held long positions in this stock. The top hedge fund holder of this stock is Ken Fisher’s Fisher Asset Management which had $816 million invested in the stock at the end of September. An insider recently purchased 15,000 shares at around $138 in March 2020. The stock is up 42% since then. During the third quarter of 2020, the company reported a net income of $1.4 billion, or $2.01 per diluted share.
Please also see 10 Best Defense Stocks to Buy for 2021 and Top 10 Agriculture Stocks to Buy Now
