7 Best Heavy Equipment and Industrial Machinery Stocks to Buy

3. Emerson Electric Co. (NYSE:EMR)

Number of Hedge Fund Investors In Q1 2024: 53

Emerson Electric Co. (NYSE:EMR) makes and sells a wide variety of industrial products such as valves, regulators, sensors, and switches, lending it a diverse business. Additionally, Emerson Electric Co. (NYSE:EMR) is a global company with a presence in China, Europe, North America, and other regions. This allows it to hedge its business performance against an economic downturn in one region, such as the Chinese industrial slowdown that has persisted since the coronavirus pandemic. At the same time, since its exposure to the struggling construction and farming stocks is limited, Emerson Electric Co. (NYSE:EMR) has benefited from a shift towards automation and upward revision of utility spending in the US. At the same time, its acquisition of process optimization firm AspenTech has allowed Emerson Electric Co. (NYSE:EMR) to grow its revenue even though industrial spending has been muted. Management expects to deliver an additional $100 million in revenue in 2024 through synergies. Additionally, its diversified business has enabled it to hedge the downturn in industrial and automation spending by focusing on the growth in energy spending, life sciences growth in Africa, and a broader uptick in metals and mining.

Emerson Electric Co. (NYSE:EMR)’s management shared details of order visibility in the third quarter and the important process optimization business during the second quarter earnings call. Here is what they said:

Look we’re off to a good start in Q3. April over April of last year is up double digit 10% on orders. Certainly – and the three months has turned positive as well. So we flipped that to the low single digits on a three-month basis trailing three-month basis. So feel good about the start, feel good about the funnel and the conversion and the markets. And it’s again, driven by the process and hybrid environment across most of the world areas. Discrete we’re watching very carefully. As we said, we expect that to turn now a quarter later than originally expected. But we’re seeing green shoots that started developing in March and into April, particularly in Western Europe, in Germany around machine makers and some of the discrete industries.

So optimistic start for the quarter again gave us the confidence as we tested our businesses and worked out process that exiting the year in that mid-single digit low single-digit type of range on orders is very, very feasible.