In this article, we will look at the 8 Best Industrial Stocks To Buy According to Analysts.
Overview of The Industrial Sector
According to a report published on March 6th, 2024 by S&P Global, nearly half of the S&P 500 stocks hit an all-time high in 2024. From the end of 2023 to the start of March, 37 out of 78 Industrial stocks in the index hit an all-time high. This was recorded as the highest percentage and number of stocks hitting an all-time high in any sector. Generally speaking during the same time around 130 stocks hit an all-time high in 2024. As per the report, the ongoing trends in the Technology sector have been the driving factor behind the rise. Specifically speaking, Information technology has gained the most during the year, rising more than 12.3% from the end of 2023 to March 2024.
Read Also: 10 Best Falling Stocks To Buy According to Hedge Funds and 8 Best Small-Cap Growth Stocks to Buy According to Analysts.
Fidelity Portfolio Manager Forrest St. Clair thinks that the surging growth within the industrial sector has been due to the trend of electrification across the United States. On October 14, he posted a note and mentioned that the industrial sector in the United States has improved over the past years, due to generous spending in the sector. Clair calls it a transformative force that is reshaping the industry and creating new investment opportunities. He mentioned that around $1 trillion has entered and will be entering the market via various acts including the Inflation Reduction Act and CHIPS and Science Act. He mentioned that while some of this investment has been utilized however most has been saved for future projects which thereby makes the outlook of certain industrial companies very positive.
While talking about the investment strategy to pick the best industrial stocks Clair pointed out to look for better-than-average companies which are trading below the average price and above average earnings per share growth. He further mentioned that electrification is not just a trend but rather is acting as a transformative force shaping the industry. He believes that companies that are investing in electric grids increasing electricity production for the country and developing electric vehicles will be well poised for growth and also benefit from the economic stimulus.
Moreover, Jason Weiner, Fidelity Portfolio Manager, also shares similar views. He mentioned that the recent federal laws have led to significant investments in the US economy, particularly benefiting industries focused on clean energy, manufacturing, and technology. Weiner highlighted that the CHIPS and Science Act aims to boost US semiconductor manufacturing by providing $52 billion in funding and tax incentives. The goal is to reduce reliance on foreign chip production, especially from countries like China. It also supports research and workforce development in technology sectors. He thinks that businesses involved in electric vehicles, semiconductors, and automation are likely to gain the most from these changes.
We have also covered 10 Oversold Tech Stocks To Buy Right Now recently. Here’s an excerpt from the article:
“In an interview with CNBC on September 30, Dave Sekera, Chief Market Strategist at Morningstar, shared his insights on the current state of the technology sector and the broader market. According to Sekera, the technology sector as a whole is “priced to perfection” and is trading at a 6% premium to fair value.
However, Sekera believes several technology stocks have run up too far trading at over 20% premium to fair value, whereas their sales have been sluggish. Sekera advises taking profits off the table for companies who are trading at a premium to fair value. Sekera’s team is also concerned that the market is overestimating the long-term growth potential of some companies due to artificial intelligence (AI), however, he believes that some of these companies will not benefit enough from AI to justify their current valuation. Sekera recommends four-star rated stocks that are trading at a discount to fair value and suggests swapping out overvalued companies and overextended AI stocks for these companies. Sekera also discussed the broader market, noting that growth stocks have outperformed value stocks for a while. However, he believes that it’s time to look at small-cap and mid-cap value-oriented names and believes that these types of value stocks are due for a rotation.
Sekera notes that the overall US market is currently trading at a 3% premium to fair value. He believes that this rotation into value stocks and small-cap stocks will be driven by the expectation of slowing economic growth in the US and the easing of monetary policy by the Federal Reserve. Historically, small-cap stocks have performed well in these conditions, and value stocks have been left behind in the frenzy to buy AI-related stocks. Sekera expects value stocks to catch up, and he believes that now is a good time to invest in these undervalued stocks.”
Let’s now look at the 8 best industrial stocks to buy according to analysts.
A skyscraper adorned with telecommunication equipment, symbolizing the industry.
Our Methodology
To curate the list of the 8 best industrial stocks to buy according to analysts, we used the Finviz stock screener and CNN. We set the stock screener to show industrial stocks with target prices of 50% or more to compile an aggregated list. From the list, we cross-checked the analyst upside potential from CNN and ranked the stocks in ascending order of the analyst upside potential. We have also mentioned the number of hedge fund holders for each stock, as the Insider Monkey’s database of Q2 2024. Please note that the analyst upside potential was recorded on October 28th, 2024.
Why do we care about what hedge funds do? 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).
8 Best Industrial Stocks To Buy According to Analysts
8. Chart Industries, Inc. (NYSE:GTLS)
Number of Hedge Funds: 47
Analyst Upside Potential: 54.95%
Chart Industries, Inc. (NYSE:GTLS) specializes in designing, engineering, and manufacturing equipment and technologies for handling gases and liquids, mainly for clean energy solutions. The company’s technologies and equipment are used in storing and transporting Liquefied Natural Gas (LNG), hydrogen production, and environmental solutions.
One of the key differentiating factors that sets Chart Industries, Inc. (NYSE:GTLS) on track for long-term growth is the utilization of its technologies for hydrogen production. As the trend for clean energy and electrification across different industries is on the rise, governments around the globe are investing in a hydrogen-fueled economy. For instance, on October 13, 2023, the US Department of Energy announced $7 billion to launch seven Regional Clean Hydrogen Hubs across the United States.
As Chart Industries, Inc. (NYSE:GTLS) is one of the key companies in hydrogen technologies such investments are expected to fuel long-term growth. Apart from this the company also came in strong with its second-quarter results for fiscal 2024. Management noted that they are on track to achieve their medium-term fiscal targets which include mid-teen sales growth and mid-30% gross margins. Moreover, during the quarter the company achieved record sales of $1.04 billion after improving 18.8% year-over-year. Gross margins also reached a record high of 33.8% after improving 310 basis points.
Chart Industries, Inc. (NYSE:GTLS) is one of the best industrial stocks to buy according to analysts.
Aristotle Small Cap Equity Strategy stated the following regarding Chart Industries, Inc. (NYSE:GTLS) in its Q2 2024 investor letter:
“Chart Industries, Inc. (NYSE:GTLS), an industrial equipment manufacturer that provides cryogenic equipment for storage, distribution, and other processes within the industrial gas and LNG, hydrogen, helium, carbon capture and water treatment industries was added to the portfolio. Strong forward demand for LNG and accelerating hydrogen opportunities coupled with company-specific improvement initiatives should benefit the company moving forward.”
7. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Funds: 33
Analyst Upside Potential: 55.56%
Avis Budget Group, Inc. (NASDAQ:CAR) is an international company that provides various mobility solutions through a portfolio of well-known brands including Avis, Budget, and Zipcar. Their key offerings include renting out cars and trucks to customers for short-term usage. They also allow users to rent cars by the hours of the day, thereby promoting flexible access to vehicles without the need for long-term commitments.
As global tourism is returning to the pre-pandemic levels, the demand for rental car business is rising with it. According to the United Nations Tourism Barometer data, International tourism arrivals have reached 96% of the pre-pandemic levels. Moreover, around 790 million tourists traveled internationally during the first seven months of 2024 indicating an 11% rise from 2023.
The business of Avis Budget Group, Inc. (NASDAQ:CAR) took a hit during the pandemic and the revenue fell 41% year-over-year to $5.4 billion in fiscal 2020. However, as global tourism has revived the business of the company has revived with it. In 2023, the full-year revenue of the company reached $12 billion, with $1.6 billion net income.
Moreover, during the most recent quarter i.e. the second quarter of fiscal 2024, the company generated $3 billion in revenue with a 2% increase in rental days when compared to 2023. The adjusted EBITDA for the Americas was $186 million with rental days showing a 1% improvement from 2023.
At the end of the second quarter of fiscal 2024, the company had $511 million in cash and cash equivalents, with no significant debt maturities until 2026.
It is the 7th best industrial stock to buy according to analysts.
6. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Funds: 29
Analyst Upside Potential: 63.22%
Bloom Energy Corporation (NYSE:BE) is a green energy company that specializes in innovative energy solutions through advanced technology. The company operates by manufacturing two main products, including the Bloom Energy Server and Bloom Electrolyzer.
Bloom Energy Server is a type of power generator that uses solid oxide fuel cell (SOFC) technology. This technology allows it to convert various fuels, such as natural gas, biogas, and hydrogen, directly into electricity without combustion.
On the other hand, Bloom Electrolyzer complements the Energy Server by producing hydrogen. It utilizes the same solid oxide technology to convert electricity into hydrogen, which can then be used as a clean fuel source.
The competitive edge of the company comes from its indispensable position as a clean energy company for artificial intelligence and data centers. According to a report published by Reuters on May 29, 2024, data centers could use 9% of US electricity by 2030. This means that the demand for clean energy companies would rise and Bloom Energy Corporation (NYSE:BE) is set to capitalize on this growing demand.
During the second quarter of fiscal 2024, the company reported to have grown its revenue by 11.5% year-over-year to $335.8 million. The company also improved its gross margins by 1.7% to 20.4% during the quarter. Moreover, it has already started entering into agreements with AI companies for instance during the second quarter earnings release management announced that it has agreed with CoreWeave, a leader in AI, to power a data center in Volo, Illinois.
29 hedge funds had stakes in Bloom Energy Corporation (NYSE:BE) during Q2 2024, making it one of the best industrial stocks to buy according to analysts.
5. Enovis Corporation (NYSE:ENOV)
Number of Hedge Funds: 30
Analyst Upside Potential: 65.66%
Enovis Corporation (NYSE:ENOV) ranks among the best industrial stocks to buy according to analysts. It was held by 30 hedge funds in Q2 2024, as per Insider Monkey’s database.
It is a medical technology company that specializes in creating products for orthopedic care. In simple terms, it makes devices and solutions that help people recover from injuries and surgeries related to bones and joints. They operate through the Prevention & Recovery segment which deals with items including braces, supports, and therapy products. It also engages in Reconstructive Surgery where the company develops implants and tools used in surgeries to replace or repair joints.
Enovis Corporation (NYSE:ENOV) made significant progress during the second quarter of fiscal 2024. The net sales for the quarter improved 23% year-over-year to reach $525 million. This increase was driven by stable performance in the Prevention & Recovery (P&R) segment and robust growth in the Reconstructive segment, which saw a 60% increase in reported sales.
Management noted that they have successfully integrated recent acquisitions, including LimaCorporate and Novastep, which have contributed to its sales growth and operational efficiencies. Another key highlight for the company came as FDA approved new products, including the Arvis 2.0 Shoulder system, with launches expected in Q3 2024. This aligns with their strategy to enhance product offerings and market reach.
Enovis Corporation (NYSE:ENOV) is optimistic about its growth trajectory for the remainder of fiscal 2024, having narrowed its revenue guidance to between $2.08 billion and $2.13 billion. The company also reaffirmed its adjusted EBITDA expectations for the year at approximately $368 million to $383 million, indicating confidence in continued momentum and profitability improvements moving forward.
Carillon Chartwell Small Cap Value Fund stated the following regarding Enovis Corporation (NYSE:ENOV) in its Q2 2024 investor letter:
“Enovis Corporation (NYSE:ENOV) manufactures and markets orthopedic devices for reconstructive implants, bracing, and physical therapy. Slowing growth following the post-pandemic recovery in medical procedures and potential disruption during an upcoming acquisition have spooked investors.”
4. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Number of Hedge Funds: 27
Analyst Upside Potential: 66.32%
Star Bulk Carriers Corp. (NASDAQ:SBLK) is one of the largest dry bulk shipping companies based in Greece. The company operates through a diversified fleet of 159 bulk carriers ranging from Supermax vessels to Newcastlemax vessels. They carry both major bulks, including iron ore, minerals, and grains, and minor bulks which include bauxite, fertilizers, and steel products. It operates internationally through various shipping routes.
The company continued its strong financial performance during the second quarter of fiscal 2024. During the quarter the company achieved a net income of $106.1 million, indicating a substantial increase from $44.3 million in the comparable quarter in 2023.
In addition, the voyage revenue also increased significantly from $238.7 million in 2023 to $352.9 million during the second quarter of fiscal 2024. Management attributed the revenue increase to a rise in the average number of vessels operated, which grew from 126.4 to 155.0, along with an increase in charter rates.
Star Bulk Carriers Corp. (NASDAQ:SBLK) ranks as the 4th best industrial stock to buy according to analysts. It was held by 27 hedge funds in Q2 2024, as per Insider Monkey’s database.
3. Pitney Bowes Inc. (NYSE:PBI)
Number of Hedge Funds: 22
Analyst Upside Potential: 79.31%
Pitney Bowes Inc. (NYSE:PBI) is the 3rd best industrial stock to buy according to analysts. The company specializes in shipping and mailing services. The company allows its customers to send and receive packages effectively and also provides financial services to allow businesses to purchase mailing equipment.
The company reported strong financial results in its second-quarter results earnings call for fiscal 2024. It was able to grow its total revenue by 2% year-over-year to reach $793 million. Moreover, the company also generated an adjusted EBITD of $46 million indicating a 43% increase year-over-year.
Management of Pitney Bowes Inc. (NYSE:PBI) has been focused on its key segments including SendTech and Presort, which have the potential to grow in the future. As a strategic move, the company has completed its review of the Global e-commerce business and has decided to sell the majority interest in the business to Hilco Global. This move will eliminate ongoing losses associated with GEC.
Management remains confident that the strategic changes will lead to improved cash flow and earnings growth moving forward. They already generated $83 million in free cash flow in the second quarter of fiscal 2024, which is a substantial improvement of $94 million year-over-year.
2. Aspen Aerogels, Inc. (NYSE:ASPN)
Number of Hedge Funds: 22
Analyst Upside Potential: 80.41%
Aspen Aerogels, Inc. (NYSE:ASPN) is a technology company that specializes in aerogel technology, which is an industrial insulation that helps improve energy efficiency. Their key products include Pyrogel designed for high-temperature applications, reducing heat loss and preventing corrosion in energy systems, and Cryogel, used for very low temperatures, this insulation helps maintain the integrity of cold systems like those found in oil and gas industries.
The strategic edge of the company lies in the application of its products. Its products are used in next-generation technologies such as electric vehicles, where its products enhance battery safety and efficiency and energy production, where it helps improve the performance of power generation systems.
Aspen Aerogels, Inc. (NYSE:ASPN) has been doing well financially, which was demonstrated by its second-quarter results of fiscal 2024. During the quarter the company grew its revenue by 145% to $117.8 million ahead of the consensus of $101.4 million. The revenue growth was driven by an increase in its Thermal Barrier business which grew its revenue by 540% year-over-year to $80.8 million.
The use case of companies products in electric vehicles is expected to contribute significant growth for the company. Analysts’ 12-month median price target is pointing towards an 80.41% upside potential from the current levels. Thereby making it one of the best industrial stocks to buy according to analysts.
Here is what Brick By Brick Capital has to say about Aspen Aerogels, Inc. (NYSE:ASPN) in its Q2 2022 investor letter:
“I am constantly reevaluating our positions and I am quick to change my mind if for example the thesis breaks or broader market forces change. That happened with a past position Aspen Aerogels (NYSE:ASPN). Many of you bought the stock in the low $30s to high $20s. I eventually exited everyone from the position in the mid teens for a loss of ~30%. I exited the position because the market sentiment towards high growth “story” stocks like ASPN completely soured along with their need for a capital raise was too much risk.
Roughly a month after selling the stock, ASPN fell ~40% in a day to the single digits on an announcement of an extremely dilutive capital raise. The point of the story? I remain vigilant on your portfolios and while loses are never fun, I am steering the ship clear of the Titanic size loses that can ruin a portfolio.”
1. Enovix Corporation (NASDAQ:ENVX)
Number of Hedge Funds: 22
Analyst Upside Potential: 83.91%
Enovix Corporation (NASDAQ:ENVX) is a company that specializes in creating advanced lithium-ion batteries, particularly those using silicon technology. It develops lithium-ion batteries that use a unique silicon-based design. This design allows their batteries to hold more energy compared to traditional batteries, which typically use graphite. This feature makes their batteries suitable for high-performance devices like smartphones and electric vehicles (EVs) without compromising safety. They are building production plants in the US and have factories in Korea to manufacture these advanced batteries at scale.
The second quarter of fiscal 2024 came in with several key highlights for the company. Enovix Corporation (NASDAQ:ENVX) began producing its first batteries at its new facility in Malaysia, marking a crucial step in scaling its manufacturing capabilities. The company also signed several important agreements including a deal with a California-based technology company to supply silicon batteries for a mixed reality headset, a collaboration with a Fortune 200 company for batteries for an IoT product that has tens of millions of users, and an MOU with a global automotive manufacturer to adapt its battery technology for automotive applications.
Financially speaking, the company grew its revenue from $42,000 in Q2 of fiscal 2023 to $3.8 million in Q2 fiscal 2024. This revenue exceeded the mid-point of their forecast range of $3.0 million to $4.0 million. Looking ahead, the company is expecting revenues in the third quarter to be between $3.5 million and $4.5 million, with ongoing efforts to scale production and enhance customer qualifications.
It is the best industrial stock to buy according to analysts and was held by 22 hedge funds in Q2 2024, as per Insider Monkey’s database. Moreover, analysts’ 12-month median price target points towards an 83.91% upside from the current levels.
Massif Capital Real Assets Strategy stated the following regarding Enovix Corporation (NASDAQ:ENVX) in its Q2 2024 investor letter:
“Enovix Corporation (NASDAQ:ENVX): Enovix is perhaps a bit of an outlier in our portfolio given that it is a battery manufacturer selling into consumer goods markets, but it fits nicely in what we believe to be the Massif Capital analytical sweet spot, businesses where science/technology, geopolitics/geoeconomics and energy/materials overlap. While some would argue that Enovix is inappropriate for a liquid real asset portfolio, the traditional definition of real asset businesses is dated.
Traditionally, real asset businesses are those that own and operate real estate, infrastructure, and natural resource assets. While this definition is workable, and most of the companies we invest in fall into one of these categories, it does not consider the ever-growing role of applied physical sciences in specific manufacturing fields, nor does it take into account the growing importance of material sciences and the changing nature of energy in general. Enovix is a material sciences business aiming to transform an ever-growing list of unique, highly refined materials into energy storage devices. They create value by understanding materials’ physical and electrochemical properties better than others…” (Click here to read the full text)
While we acknowledge the potential of Enovix Corporation (NASDAQ:ENVX) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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