The industrial sector is starting to pick up steam in 2024, making it a great time to consider the best industrial stocks to buy. Often considered a cornerstone for the U.S. economy, it is no surprise that investors continue to explore this abundant sector.
From infrastructure, machinery, waste management and transportation, the industrial sector stands as a barometer for economic health and stability. With interest rate cuts on the table in 2024 coupled with a resurgence in economic activity, these three companies are attractive options for the risk-averse investor. They showcase robust industry fundamentals and exhibit substantial growth potential over the long term.
Now, let’s discover the three best industrial stocks for 2024.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) is an American construction company headquartered in Irving, Texas. They are currently the world’s largest manufacturer of construction equipment.
Caterpillar is about to close off a strong 2023 fiscal year. Even while tightening financial conditions, the company has delivered strong YOY growth in revenue and EPS. This includes providing robust cash flow generation, primarily driven by higher sales volume. The stock currently appears cheap, making it a great time for investors to consider the best industrial stocks to buy for 2024.
Caterpillar saw strong top and bottom line growth in their latest quarterly results. Revenue increased 12% YOY to $16.8 billion, with GAAP EPS up 41% to $5.45 per share. Cash from operations in Q3 2023 was $3.3 billion, compared to $1.9 billion from the prior year. The Infrastructure Investment and Jobs Act will serve as a key growth driver for the company over the next decade. Tens of billions of dollars will be committed to building new roads, bridges, transportation, and clean energy infrastructure, which will ultimately be good news for Caterpillar. With EPS projected to surge in FY23, Caterpillar stock looks like a cheap buy here.
Waste Management (WM)
Waste Management (NYSE:WM) is one of the most compelling industrial stocks to buy for 2024. They’re the largest waste management company in the world by market capitalization.
The waste management sector is one of the most important businesses in the world. Whether the economy is good or bad, waste must always be collected. Over the last two years, WM stock has delivered strong revenue, and EPS growth is expected to extend into the 2023 fiscal year. Furthermore, the company remains bullish on renewable natural gas (RNG), with its 7th facility going online early this month.
In Q3 2023, WM saw a modest revenue growth of 2% YOY. EPS rose 6% YOY due to organic growth in the collections and disposal business. Operating EBITDA margin expanded by 100 basis points in the quarter as management focused on cost structure optimization. While growth was nothing spectacular, the outlook for the 2023 fiscal year remains strong. CEO Jim Fish plans to increase operating leverage in FY24, and renewable natural gas (RNG) could be one of the primary drivers.
Republic Services (RSG)
Republic Services (NYSE:RSG) is another waste management stock investors should keep on their radar in 2024. The company is setting up for a strong year as the economy rebounds.
Republic Services has far outpaced the S&P 500 (NYSEARCA:SPY) over the last five years, rising 124% vs. 84%. This is a result of significant revenue, EPS and FCF growth. Furthermore, the company has averaged a 7% CAGR in its dividend during the same period.
In Q3 2023, revenue grew 6% YOY to $3.83 billion. However, what was more impressive was the company’s net income, which surged from 15% YOY to $480.2 million. Adjusted EBITDA margin increased by 70 basis points as a healthier pricing strategy drove profitable growth. The board of directors also authorized a $3 billion share repurchase program, reflecting their confidence in driving long-term sustainable value creation. With EPS projected to grow 16% in FY23, RSG remains one of the top industrial stocks to buy for 2024.
On the date of publication, Terel Miles 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.
