Industrial stocks are going to be some of the busiest stocks in the market over the next couple of quarters. As we’ve seen, tech is beginning to correct after a massive run through the teeth of the pandemic. And now that the digital economy has had a run, it’s time for the industrial economy to take the lead.
Low interest rates and big economic stimuli have flooded the economy with money and now that many investors have had a go with meme stocks and blank-check stocks, there are opportunities for stocks with real meat on their bones.
Many of the seven quality industrial stocks here are focused on the energy markets. That’s for two reasons. First, they have been the most beaten down and second, energy is the lifeblood of the economy, so its rise will be fast to fulfill demand for industry and consumers.
- DCP Midstream LP (NYSE:DCP)
- Dycom Industries (NYSE:DY)
- Halliburton (NYSE:HAL)
- MasTec (NYSE:MTZ)
- Quanta Services (NYSE:PWR)
- Baker Hughes (NYSE:BKR)
- New Fortress Energy (NASDAQ:NFE)
Industrial Stocks to Buy Now: DCP Midstream LP (DCP)
Midstream energy companies are generally recognized as pipeline companies. DCP falls into that definition. But it doesn’t do both oil and natural gas — it focuses on natural gas.
It takes the raw gas from the wellhead and then processes it into “dry” gas to run through its pipeline to storage units or on to other processing unity to be “fractionated,” which separates the gas into non-gas liquids (NGLs) like butane, propane and ethane. These NGLs have their own markets for commercial and consumer uses.
The U.S. has huge amounts of natural gas locked inside the shale fields around the country and gas has quickly supplanted coal as the fuel of choice for many industries. It’s also showing up in new vehicles as well because it burns more efficiently than oil or coal.
DCP is a limited partnership, which means stockholders receive net profits in the form of dividends. And midstream companies make their money on volume, not natural gas prices, so an expanding economy is a good thing.
The stock now delivers a near-6.3% dividend, is up 41% year to date. Oh, and it’s still trading at decent valuations.
DCP stock has a ‘B’ rating in my Portfolio Grader.
Dycom Industries (DY)
If you’re looking for an infrastructure play that is about as fundamental as they get, then DY is your stock.
The company builds, engineers and locates telecom infrastructure as well as other utility infrastructure. So if fiber optic cable is heading to your area, a DY subsidiary may well be laying it. Or if someone is putting up 5G towers, the lines to and from those towers could be a DY job.
The company embodies the real value of industrial stocks in work that makes everything go but is invisible to most people on a day-to-day basis.
The stock has been bid up in anticipation of the big infrastructure stimulus bill in Congress, but it’s still a deal during its 30% run year to date.
DY stock has a ‘B’ rating in my Portfolio Grader.
Industrial Stocks to Buy Now: Halliburton (HAL)
If the energy patch is reviving, then one sure beneficiary is HAL. This industrial stock is one of the world’s leading oil services companies.
It has been around since 1919, so it has seen good times and bad in the oil fields and knows how to adapt. The rig count in the Permian basin (a big shale field in west Texas) continues to slide, but that’s good news for entering HAL, since its equipment and services are best focused on getting the most out of current wells and helping exploration and production firms figure out when to bring new or dormant wells online.
The stock is up 26% year to date, and you can expect that HAL will come back strong once rig counts start rising and demand for energy grows. This is a good time to get in.
HAL stock has a ‘B’ rating in my Portfolio Grader.
If you’re looking for a hard-core industrial stock, then look no further. MTZ builds the infrastructure that makes other industrial stocks function. It builds the pipelines and processing plants for midstream oil companies. It builds the towers and installs and engineers other infrastructure for mobile telecom and fiber optic cable. And it even contracts out electrical utility work from the nation’s utilities.
Because it’s such an integral part to key facets in U.S. infrastructure, the stock has already started to move — it’s up 78% year to date. Yet it’s still reasonably priced since it was a wallflower for the past few years.
MTZ stock has a ‘B’ rating in my Portfolio Grader.
Industrial Stocks to Buy Now: Quanta Services (PWR)
This is one of my favorite infrastructure contractors. Like its brethren industrial stocks MTZ and to an extent DY, it’s at the heart of the U.S. economic system. It will be a big player in upgrading the national power grid, the transition to 5G telecom, upgrades to existing energy pipelines and all the work in between.
With a $13 billion market cap, it’s the biggest pure-play infrastructure stock of the three and it’s still a lot cheaper than the S&P 500 average price-to-earnings ratio and most tech stocks.
PWR is up 41% year to date and 189% in the past 12 months, after running in place for a long while. The secret is out.
PWR stock has an ‘A’ rating in my Portfolio Grader.
Baker Hughes (BKR)
As one of the big three oilfield services companies along with HAL, BKR covers every aspect of products, equipment and services for the lifetime of a well.
The company has been around in one form or another since 1908 and currently operates in over 120 countries. Like HAL, BKR will benefit as the global economy gets back on track because U.S. oil services companies hold a leading position for their quality and expertise with allies and competitors alike.
Usually, oil demand runs in multi-year cycles, so this expansion could be with us for a while.
BKR stock has a ‘B’ rating in my Portfolio Grader.
Industrial Stocks to Buy Now: New Fortress Energy (NFE)
A relative newcomer to the industrial stocks, NFE is already making a big splash. Launched in 2014, it already has a market cap just a shade under $8 billion. That makes it a mid-sized player in the energy patch. And its unique business model is very appealing, especially as ESG investing grows.
NFE supplies liquified natural gas (LNG) into markets, building out everything from LNG import facilities to LNG-to-energy power plants. It brings the gas from the U.S. and then builds LNG infrastructure where it’s needed.
Currently it has operations in the Caribbean, Latin America and Ireland. This strategy is ideal for isolated regions and smaller countries that don’t have a well-developed energy infrastructure and can’t afford to build one out. LNG is also very cheap in the U.S. and the margins are very large for other countries around the globe.
The stock made a big move in the past 12 months, but the market is clawing some of it back now, which makes it a good time to buy. NFE is off 21% year to date, which means it’s pretty well valued here.
Just bear in mind, this is a unique company with a market in a fair amount of developing nations, so it’s riskier than some other choices here.
NFE stock has a ‘B’ rating in my Portfolio Grader.
On the date of publication, Louis Navellier has a position in PWR in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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