Upper industrial sector stocks this month include Circor International Inc., Sterling Infrastructure Inc. and Bombardier Inc., all of whose stock prices have doubled over the past year.
Industrial stocks represented by the Industrial Select Sector SPDR ETF (XLI), are up 9% over the past 12 months, compared to a 6% gain for Russell 1000.
Here are the top three industrial stocks with the best value, fastest growth and most momentum. All data are as of June 8.
Best Value Industry Stocks
These are industrial stocks with the lowest values 12-month ending price-earnings (P/E) ratio.. Because profits can be returned to shareholders in the form of dividends and buybacksa low P/E ratio indicates that you are paying less for every dollar of profit generated.
| Best Value Industry Stocks | |||
|---|---|---|---|
| Price ($) | Market capitalization (market capitalization) ($B) | 12-month trailing P/E ratio | |
| ZIM Integrated Shipping Services Ltd. (WINTER) | 13.71 | 1.6 | 0.6 |
| Cresud SACIF y A. (CRES) | 7.04 | 0.4 | 1.1 |
| Navios Maritime Partners LP (NMM) | 21.21 | 0.6 | 1.1 |
Source: YCharts
- ZIM Integrated Shipping Services Ltd.: ZIM Integrated Shipping Services is an Israeli container shipping and logistics company operating in more than 90 countries. On May 22, the company released its first-quarter earnings, reporting a net loss of $58 million, compared to net income of $1.7 billion in Q1 2022. Total revenue also fell 63%. ZIM saw a significant drop in demand for transport services and a year-on-year drop in transport rates of 64%. Shares are down 84% from their March 2022 highs.
- Cresud SACIF y A.: Cresud produces agricultural commodities such as soybeans, wheat, corn and sugarcane. The company also maintains a portfolio of investment properties, including city hotels, shopping centers and office buildings throughout Argentina. Net income was 17.5 million Argentine pesos in the first quarter of 2023, compared to a loss of 30 million pesos in the previous year, when the company adjusted the fair value of its real estate investment down by 75 million pesos.
- Navios Maritime Partners LP: Navios Maritime Partners is a Monaco-based maritime shipping company that transports dry and liquid bulk cargo, petroleum products and other commodities.
Fastest growing industrial stocks
These are the best industry stocks by rating and grow a model that ranks companies based on 50/50 weights of their most recent quarterly year-over-year percentage revenues growth and last quarterly year-on-year earnings per share (EPS) grow.
Both sales and profit are factors that are critical to the success of a company. Therefore, evaluating companies by only one growth metric makes the evaluation susceptible to accounting anomalies quarter boy (such as changes in tax law or restructuring costs) which may make one or the other figure not generally representative. Companies with quarterly earnings per share or revenue growth of more than 1,000% were excluded as outliers.
| Fastest growing industrial stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS growth (%) | Income growth (%) | |
| Nikola Corp. (NKLA) | 0.61 | 0.4 | N/A (see company description) | 489 |
| Nordic American Tankers Ltd. (NAT) | 3.64 | 0.8 | N/A (see company description) | 461 |
| EHang Holdings Ltd. (EH) | 11.07 | 0.7 | N/A (see company description) | 256 |
Source: YCharts
- Nikola Corp.: Nikola manufactures battery and hydrogen semi-trailers and energy storage systems. Nikola sold $10 million worth of trucks in the first quarter, nearly quintupling its revenue from the year-ago quarter, when it saw $2 million in service revenue and no truck sales. Note Nikola does not have an EPS growth figure in the above table because the company reported a loss per share in the last quarter.
- Nordic American Tankers Ltd.: Nordic American Tankers is a Bermuda-based crude oil company that operates 19 vessels. Note: Nordic American Tankers does not have an EPS growth figure in the above table because the company reported a loss per share in the first quarter of 2022.
- EHang Holdings Ltd.: EHang designs and manufactures autonomous aerial vehicles for use in the transportation and logistics industries. Note EHang Holdings does not have an EPS growth figure in the above table because the company reported a loss per share in the last quarter.
Industrial shares with the greatest dynamics
These are industrial stocks that have had the highest total return over the past 12 months.
| Industrial shares with the greatest dynamics | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12 month total return (%) | |
| CIRCOR International Inc. (CIR) | 47.73 | 1.0 | 143 |
| Sterling Infrastructure Inc. (STRL) | 53.02 | 1.6 | 113 |
| Bombardier Inc. (BBD.B.TO) | CA$58.94 | CA$5.6 | 98 |
| Russell 1000 Index | ON | ON | 3 |
| Industrial Select Sector SPDR ETF (XLI) | ON | ON | 6 |
Source: YCharts
- CIRCOR International Inc.: CIRCOR International manufactures critical flow products for the aerospace, defense and industrial industries. On June 5, CIRCOR shares surged 51% after the company announced it would be acquired by KKR & Co. Inc. (KKR), a private equity firm, for approximately $1.6 billion.
- Sterling Infrastructure Inc.: Sterling Infrastructure is involved in construction projects for the transportation, storage and home building industries. On May 1, Sterling released its first quarter earnings. Net income rose 11% along with a 10% increase in total revenue compared to the first quarter of last year. Revenue at the company’s E-Infrastructure segment, which develops data centers and e-commerce infrastructure, rose 22% on strong demand for data center services.
- Bombardier Inc.: Bombardier is a Canadian aerospace company that manufactures commercial aircraft and related components.
Benefits of Investing in Industrial Stocks
Established companies: Many industrial companies have been in business for decades and have proven to successfully navigate the economic cycle boom-and-bust period. If an industrial company has been generating consistent returns for shareholders for decades, there is a good chance that it will continue to do so in the future. For example, the aerospace giant Boeing (B.A) has weathered many challenges over its 106-year history, but its share price has mostly risen since its IPO New York Stock Exchange (NYSE) in 1962.
Infrastructure spending: The sector will benefit from increased national infrastructure spending as the economy recovers from the pandemic. In November 2021, lawmakers approved $1.2 trillion infrastructure billwhich means a windfall for industrial companies that provide construction equipment and services, such as Fluor Corporation (FLR), Caterpillar Inc. (CAT) and Jacobs Engineering Group Inc. (J).
Risks of Investing in Industrial Stocks
Global economy: Many industrial stocks operate internationally, exposing them to a slowdown in global economic growth. A growing number of American industrial companies such as the 3M Company (MMM) and General Motors Company (GM), generate significant revenue from China, making them particularly sensitive to the health of the Chinese economy.
Tariffs: Industrial enterprises may face challenges from trade tariffs arising from geopolitical tensions between countries. For example, many American and Chinese industrial enterprises have been caught in the tit for tattoos trade war between Washington and Beijing in 2018, when the two economic superpowers disagreed over trade practices. The tariffs imposed by President Trump affected more than $300 billion worth of imports and raised the price of some goods such as semiconductors and audio/video equipment by as much as 25%, an increase that importers could only partially pass on to consumers.
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As of the writing of this article, the author does not own any of the above stocks.