Industrial stocks are not flashy or cutting edge. They are often railroads, construction companies, or firms that make heating and ventilation equipment. As a result, industrial companies and their stocks have a difficult time competing for attention with generative artificial intelligence and other exciting technologies. But industrial companies remain critically important. Their businesses are essential and form the backbone of the U.S. and global economies. They employ 20% of the American workforce, a percentage that has remained constant since 2010. And despite their blue-collar nature, many industrial companies are extremely well-run, profitable, and continue to grow despite economic shocks and cycles. Investors looking to diversify their portfolios should consider adding an industrial name. Here are seven industrial stocks to buy for April 2023.
Industrial Stocks to Buy: Caterpillar (CAT)
Caterpillar (NYSE:CAT) remains the world’s largest manufacturer of construction equipment. Its distinctive black-and-yellow bulldozers and excavators can be found at construction sites across North America and around the world. The company and its stock had a difficult time during the pandemic and throughout 2022 as inflation reared its ugly head. However, CAT stock appears to have bottomed last September. Since then, the company’s share price has risen 38%, erasing most of last year’s decline.
CAT stock has cooled off after hitting a fresh 52-week high in January of this year, presenting a good entry point for investors. Concerns about a slowing economy and a potential recession this year are weighing on Caterpillar’s share price.
But over the long-term, Caterpillar will remain a leading industrial name, and it will be a smart stock to own. Over the last five years, Caterpillar’s share price has gained nearly 50%.
The stock is also reasonably valued right now with a price-earnings (P/E) ratio of 17, and it offers an attractive dividend yield of 2.16% or $1.20 per share.
United Rentals (URI)
When it comes to picks and shovels in the ground, look no further than United Rentals (NYSE:URI). The biggest construction-rental equipment company in the world has been on an upswing in recent years, with its stock having risen 13% in the last 12 months and gained over 110% in the past five years. URI stock has gotten a lift from the $1.2 trillion U.S. infrastructure bill, which many Wall Street analysts see as a potential boon for the company.
Currently, United Rentals has more than 4,500 pieces of equipment valued at $20 billion for rent, including forklifts, backhoes, bulldozers and excavators. With nearly 25,000 employees and $11.6 billion of annual revenues, United Rentals can be found throughout the U.S. and Canada.
The company is branching out across Europe, as well as Australia and New Zealand. And despite its run over the last year, URI stock looks affordable with a P/E ratio of 12. The dividend yields 1.58% or $1.48 per share each quarter.
Owens Corning (OC)
A less familiar name in the industrial space is Owens Corning (NYSE:OC), the world’s largest manufacturer of fiberglass composites. The company makes insulation for houses and commercial buildings, as well as roofing materials. Its products are necessary in nearly every type of construction, which helps to explain the outsized gains in OC stock. In the last year, Owens Corning’s share price has increased 16%, bringing its gain over the past decade to 180%.
The company has a history of crushing quarterly earnings expectations, including in its most recent print. However, OC stock has pulled back recently after the company gave lukewarm guidance for Q1 of this year, citing a slowing housing market and continued pressure from high mortgage rates.
But don’t be fooled. Owens Corning remains a leading industrial stock and a great way to gain exposure to the U.S. housing sector. Some analysts insist the stock is currently undervalued with a P/E ratio of only seven. The dividend yield is enticing at 2.11% or 52 cents a share.
Industrial Stocks to Buy: First Solar (FSLR)
First Solar (NASDAQ:FSLR) is a leading manufacturer of solar panels, an industry that is heating up across the U.S. The company and its shareholders are riding the renewable power wave, and FSLR stock has been a top performer as a result.
In the last year, First Solar’s stock has more than doubled, having gained 166%, including a 44% increase so far this year. The share price is up 197% over the past five years. That kind of outperformance has been hard to come by in the last 18 months in any area of the stock market.
UBS said in a note to clients that First Solar is likely to benefit from the U.S. Inflation Reduction Act that provides tax credits which cover 30% of the cost of installing solar panels. First Solar’s most recent earnings were also impressive, with its net sales rising 10% year-over-year and the company’s net loss declining 85%.
Investors who like Heico Corp. (NYSE:HEI) like the stock a lot. Some people have gone so far as to refer to the industrial company as a “genius stock” for investors to own. Hyperbole aside, Heico specializes in making replacement parts for the airline industry. Its role as the largest independent provider of FAA-approved aircraft replacement parts to commercial airlines and the U.S. military is a niche business that gives the company a unique position in the marketplace.
Heico also has a history of delivering strong earnings and has a balance sheet that contains very little debt. These facts have all helped HEI stock to power ahead of the stock market.
HEI stock has gained 11% in 2023, and is up 140% through five years. Its P/E ratio is on the high side at 65, and its dividend yield is skimpy at 0.12% or five cents a share per quarter. However, it is important to remember that Heico benefits from having a near-monopoly position in a highly specialized business. The stock is up 900% since April 2013.
Union Pacific (UNP)
We’ve got to include a railroad on this list, and Union Pacific (NYSE:UNP) gets the nod. The company, along with the entire railroad industry, has struggled coming out of the pandemic due to global supply-chain problems, notably at America’s ports, that have hampered shipping over land.
As a result, UNP stock is down 20% over the last year. However, the shares have advanced 50% in the past five years. Like many other names on this list, Union Pacific’s valuation is attractive with a P/E ratio of 17, and it offers shareholders a dividend yield of 2.61% or $1.30 per share.
Union Pacific has committed to pay 45% of its future earnings as a dividend to shareholders. The dividend pledge should attract investors to this railway company, which has 30,000 employees and annual revenues in excess of $20 billion.
The company most recently announced plans to replace CEO Lance Fritz this year, a move that some analysts say could unlock more value for its shareholders.
Industrial Stocks to Buy: Carrier Global (CARR)
Last but far from least, we have Carrier Global (NYSE:CARR), a leading American HVAC company. Carrier makes heating, ventilation, and air conditioning units, as well as some fire and security equipment. While Carrier Global is a nuts-and-bolts company (literally), its stock has managed to provide long-term gains to shareholders. In the last five years, CARR stock has increased 244%. So far in 2023, the share price is up 5%.
Carrier Global distinguishes itself in the HVAC game by putting an equal emphasis on residential and commercial clients. The company has also partnered with Amazon (NASDAQ:AMZN) to create cloud-based security products.
As with the other industrial companies on this list, Carrier Global has a track record of strong earnings, with its net income and earnings per share both rising more than 100% year-over-year in 2022. Its P/E ratio of ten shows that CARR stock is attractively valued with a dividend that yields 1.69% or 19 cents a share per quarter.
On the date of publication, Joel Baglole did not have (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.