One of the simple concepts of Dow Theory is that if industrials are doing well and transports are doing well, the economy is doing well. If businesses and people are buying goods, then industries are busy making those goods and transports are sending them where they need to go.
You only have to look at the stock market indicators to see this is the case the now, and likely for 2020. Industrial stocks at record highs and climbing higher.
Currently, the only real issue with the markets is the assassination of Iranian General Qassem Soleimani. This is only a short-term reaction to a news event, pricing in something that may occur. But this too will pass.
While we can’t count out some sort of retaliation, we also can’t calculate what it might be. That may leave the market jittery, but it doesn’t outweigh the strength of the global economy. All over the world, key, game-changing trends are resulting in plenty of significant opportunities for investors.
Below are seven industrial stocks to buy for a strong new year. Each is a solid pick amid the current recovery in the global economy.
Industrial Stocks to Buy: KBR Inc (KBR)
KBR Inc (NYSE:KBR) might be just the company you want to choose if you think that saber-rattling between the U.S. and Iran is going to escalate.
After all, KBR was a chief contractor during the Gulf War when George W. Bush was president. It ran everything from food services to logistics and a lot of operations in between.
It’s also very well known for work on large infrastructure projects as well as oilfield and energy services work. This should be a growing sector regardless of Middle East tensions.
It also has been landing work in China, due to its good relations beyond the U.S. That will help it as Asia gets back on the growth track.
Up a surprising 85% in 2019, it’s still trading at a trailing price-to-earnings ratio of 23.
Republic Services Inc (RSG)
Republic Services Inc (NYSE:RSG) is one of the largest solid waste disposal companies in the nation, operating in 40 states and Puerto Rico.
As China and other Asian countries have begun to grow, they have stopped taking U.S. recycling since they now have enough of their own on their hands. This has had a bad effect on smaller waste companies that don’t have access to landfills and lack a strong internal recycling program.
But RSG is big enough where this becomes a significant competitive advantage. And it can use this industry transition as an opportunity to add struggling firms to its vast fleet and link them into its 91 recycling centers and 190 modern landfills. It’s the kind of structure that results in rock-solid business models like the kind I’m always seeking out with my Growth Investor stock strategy.
RSG stock is up 23% in the past year and delivers a reliable 1.8% dividend.
Great Lakes Dredge & Dock Corp (GLDD)
Great Lakes Dredge & Dock Corp (NASDAQ:GLDD) is an interesting company. It has two core lines of business: dredging and environmental services and infrastructure.
If you consider that there are many cities that are sitting on the shores of the Great Lakes, the Mississippi River and other large bodies of water that still use them as recreation and commerce, they need to be maintained. Sediment builds up and the channels need to be cleared. Either that or erosion becomes a problem and structures need to be built to keep land and property safe from the slow erosion of the water.
And now, as global warming becomes more apparent, coastal cities are even more at risk and need to implement more significant efforts in keeping their cities from falling into the water.
The stock rose 64% in 2019, yet it currently trades at a trailing P/E of 27.
Sharps Compliance Corp (SMED)
Sharps Compliance Corp (NASDAQ:SMED) is a medical waste company that currently operates in 24 states.
This specialty service is a growth industry, just in sheer demographic terms. The U.S. is going to see tens of millions of baby boomers hitting 65 every year for the next decade or two.
That means there is going to be a growing demand for care for chronic and acute diseases. And it also means a lot of testing. That means a lot of waste.
Granted SMED is a pretty small company, with a market cap just over $70 million. But in a growth economy, that means it will leverage its growth much more easily than larger, more diversified companies in the space.
And, at that price, it could be a very tasty takeover target. The M&A space is something I’ve definitely got my eye on this upcoming year in Growth Investor.
SMED is a bit expensive now, but it could grow into its valuation very quickly.
Casella Waste Systems Inc (CWST)
Casella Waste Systems Inc (NASDAQ:CWST) started in 1975 when Doug Casella bought a truck to pick up garbage from a few customers in Rutland and Killington, Vermont.
Soon, his brother joined him. Now the company has a $2.2 billion market cap and operates a wide range of waste management services throughout New England, upstate New York and Pennsylvania.
It has a number of landfills and processes recyclables and waste services for 40 states. CWST is already taking advantage in the new trend in waste service management in the U.S.
The stock is up 66% over the past year, but its trailing P/E is very high. But analysts keep raising its price target and the market can’t seem to get enough of the stock. That means it’s a likely takeover target, or its geography makes it a winner for managing more recycling and waste out of New England.
Phillips 66 Partners LP (PSXP)
Phillips 66 Partners LP (NYSE:PSXP) is a spin-off master limited partnership (MLP) from its parent namesake. This isn’t unusual in the energy industry where creating MLPs has advantages to the larger diversified company and also offers tax breaks.
What investors get in return is a company that delivers a solid dividend since net income is distributed to partners (in this case stockholders) in the form of a dividend.
In the case of PSXP, that dividend is running at 5.5% now. And that’s after a healthy 36% return in the past year.
PSXP is a focused midstream company, meaning it’s all about pipeline assets. And I’ve made it crystal clear for my Growth Investor subscribers that this is best sector of the energy patch to be in now. This is the segment where rising energy demand will make its biggest mark, especially for U.S.-based energy production.
IES Holdings Inc (IESC)
IES Holdings Inc (NASDAQ:IESC) is, at its core, an American electrical industrial infrastructure company.
While it’s technically a small-cap company, with a market cap of $531 million, it has its hands in the big jobs around the U.S. (and the world). It operates out of four divisions: Infrastructure Solutions, Communications, Residential and Commercial & Industrial.
All of its work is at industrial scale and most involves electrical work on large scale projects for industry or government projects.
As a small company in a growth-oriented market, especially with low interest rates that makes borrowing and building cheaper, IESC is well placed to grow in the next year or more.
The stock is up nearly 50% in the last year, yet it’s trailing P/E is a mere 16. That means it’s still undervalued, even as it’s realizing its growth potential.
Even better than buying a strong company at a bargain, however, is harnessing an entire, earth-shaking trend. And I’ve got my eye on such a phenomenon now.
‘The Mother of All Technologies’
Up until now, technologies have certainly made our lives easier and more efficient … but with a lot of room for human error. People trip over cords, spill their coffee and get tired.
Artificial intelligence does not.
If that sounds futuristic, well then, the future is already here. If you use apps like Netflix (NASDAQ:NFLX), TurboTax, QuickBooks, Zillow (NASDAQ:Z) or even an email spam filter, then AI is already helping your day run more smoothly. And as scientists find even more applications for artificial intelligence — from healthcare to retail to self-driving cars — it’s incredible to imagine how much data will be involved.
To create AI programs in the first place, tech companies must collect vast amounts of data on human decisions. Data is what powers every AI system.
So any one company that can help with customers’ data issues is the one company that’s most worth investing in.
You don’t need to be an expert to take part. I’ll tell you everything you need to know, as well as my “buy” recommendation, in Growth Investor. My No. 1 stock for the AI trend is still under my buy limit price — so you’ll want to sign up now. Get in while it’s still cheap.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.