We all know that President Trump won the election by appealing to the idea of “making America great again.” A hefty dose of that came down to making sure Americans had jobs again. While most of his time in office has been mostly talking points and rhetoric on the subject, his latest executive order actually provides a real framework for getting America working again.
Trump’s order — dubbed “Buy American, Hire American” — would seek to limit the inflows of foreign workers under visas, as well as provide protections for American-made products. Moreover, it provides education and technical skills training for American workers to make them more competitive.
But what it really does is make industrial stocks a major buy.
The sector has already been riding hiding on Trump’s win, but the major industrial stocks could have more juice left in their tanks as Trump’s plans to boost growth and American manufacturing finally start to be born. For investors, that provides plenty of long-term opportunities.
With that in mind, here are three industrial stocks to buy today.
Industrial Stocks to Buy Today #1: Honeywell (HON)
Year-to-Date Growth: 12.7%
Long-Term Growth: 6.9%
Founded nearly 125 years ago, Honeywell International Inc. (NYSE:HON) has grown tremendously from just being a producer of thermostats to being one of the largest industrial stocks on the planet. Sure, the namesake thermostats are still there — albeit more high-tech.
But HON also manufacturers everything from films used in medical drug packaging to gas turbine engines. That huge product line has allowed this industrial stock to navigate some pretty rough economic waters over its history.
But what sets Honeywell apart is that the majority of its products are used by other manufacturers. This includes its hefty avionics and control systems businesses. So if another firm is outfitting a cockpit of a new plan, HON will get the nod to many of the control pieces inside. This puts Honeywell in a unique position to profit, as it directly benefits from Trump’s “buy American” pledge.
Analysts now peg that HON will grow its earnings 6.7% this year, 8.8% next year and 6.9% average annually over the next five years — partly because of Trump’s pro-America ambitions.
That strong earnings growth will continue to benefit investors through HON’s commitment to growing its dividend. Honeywell has managed to increase its dividend by 11% annually since 2007.
Industrial Stocks to Buy Today #2: Grainger (GWW)
YTD Growth: -16.5%
Long-Term Growth: 7.5%
If you want to buy American, you need to know where to find American products. Luckily, W.W. Grainger Inc (NYSE:GWW) has you covered. GWW is a business-to-business industrial supplier. This means it sells and markets a host of products that other businesses need to function. If you need sophisticated hardware and electrical equipment, you call Grainger. You need 100 mops and cleaning supplies? You also call GWW. In fact, Grainger sells over 1.5 million products to more than 3 million customers.
That’s a great place to be in if the commander in chief is trying to boost industrial activity. In the end, it’ll mean plenty of additional cash flows for GWW as “”Buy American, Hire American” takes hold.
Not that Grainger needs the help. The firm reported a nice jump in its year-over-year cash flows from rising industrial activity. Revenues for the year gained about 1% as its new digital and online initiatives are starting to bear fruit.
In the end, GWW could be one of the best industrial stocks to play the continual gains in manufacturing. Grainger’s forward price-earnings ratio of only 15 is the icing on the cake.
Industrial Stocks to Buy Today #3: Ingersoll-Rand (IR)
YTD Growth: 18%
Long-Term Growth: 9.5%
Ingersoll-Rand PLC (NYSE:IR) is truly a very random collection of the manufacturing business. Where else can you find high-powered air-compressor tools, air conditioners/HVAC units and golf carts under the same roof?
But that odd collection of businesses is growing. IR analysts estimate a steady 7% jump in earnings per share growth over the course of 2017 for Ingersoll-Rand as margins continue to improve and there is a rebound in end-user demand.
That 7% increase could be a drop in the bucket, however, when looking at more intermediate-term catalysts. As one of the largest producers of heavy construction equipment/tools — such as jackhammers — Ingersoll-Rand is poised to profit from the continued roll-out of higher infrastructure spending. IR should also benefit from the increased infrastructure/building retrofits for its advanced heating/cooling systems.
Adding its robust free cash flows, double-digit estimates for per-share earnings growth next year and its low P/E of just 14, Ingersoll-Rand is a great pick for those investors looking for growth at a reasonable price. This is one many industrial stocks that investors shouldn’t ignore.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.