In this article, we look at the top 10 industrial machinery stocks to invest in. If you would like to skip the industry sector overview, please proceed to the next page. 5 Industrial Machinery Stocks Best for Investment.
The industrial machinery industry is one of the most capital-intensive industries in the world. Starting a company to manufacture these machines is no easy task, often requiring years of expertise and large amounts of capital, but until very recently large nations such as the United States and the Soviet Union was only available.
These companies often trace their roots to the U.S. industrial boom during World War II, and over time became private companies. At the same time, high barriers to entry mean that industrial machinery stocks not only rank among the world's most advanced companies, but also that these companies enjoy the comfort of economies of scale that make it difficult to compete. also means
As an example, consider some of the most valuable industrial machinery stocks in terms of market capitalization. Some of these companies include General Electric Company (NYSE:GE), Illinois Tool Works Inc. (NYSE:ITW), and Eaton Corporation plc (NYSE:ETN). General Electric manufactures and sells some of the most advanced machinery in the world. These include jet engines and nuclear reactors, which are the backbone of the U.S. Air Force. These reactors are some of the most precisely engineered products on the planet because they operate in high-stress environments, where even the slightest failure can result in extreme disaster.
Similarly, Eaton plays an important role in the global aviation supply chain. The average jet engine on a commercial airliner contains 50,000 individual components, from precision crystal fan blades to pipes, pumps, and hydraulic motors. All of these need to be kept in top condition and are built to standards that many companies cannot achieve.
However, unlike high-growth technology stocks, industrial machinery stocks are more pragmatic. Like its technology peers, the company's performance depends on interest rates because it requires loans to finance expensive manufacturing plants and other equipment. Similarly, the brighter the economic outlook, the better the price of industrial machinery stocks on the stock market, since the demand for industrial machinery's products is assumed to be stable.
As an example of this aspect of industrial machinery stock price performance, consider the stocks of General Electric and Eaton. The company shed 51% of its value on the stock market as investors' outlook for the global economy darkened after coronavirus lockdowns were introduced.
But what about recent stock performance? Ultimately, investors' expectations for interest rate easing could also be a tailwind for industrial machinery stocks. In 2024, investors started the year optimistic about a rate cut, but have settled in with the realization that it may take longer than the Fed would like. Year-to-date, GE and Eaton are up 39% and 31%, respectively, with GE enjoying slightly higher returns following the announcement to split into two companies.
Analyzing industrial machinery stocks requires investors to focus on the company's product portfolio and its potential to both reduce costs (often referred to as “margin improvement”) and gain market share. It means not to be. Both of these themes were also present throughout the latest hedge fund investor letter cycle for Q4 2023.
For example, Southeastern Asset Management mentioned General Electric in a contemporaneous letter to investors, summarizing:
General Electric – Industrial conglomerate General Electric (GE) had the best performance of the year. We exited this multi-year investment as the price exceeded our valuation. In Q1 2023, GE spun out his GE Healthcare and we sold it because it traded at our value. The stock continued to perform well throughout the spring and summer, and I finally sold my position in the third quarter when I decided there was no longer a margin of safety in the business. CEO Larry Culp has created significant value for shareholders by reducing leverage, lowering costs, streamlining operations, improving culture, and simplifying the company's structure with his plan to split the company into three businesses. He was a great partner. He hopes to have the opportunity to partner with him again in the future.
In its coverage of Xylem Inc. (NYSE:XYL), Artisan Partners elaborates:
Xylem is a global leader in water technology across pumps, smart meters and treatment services. More than 80% of the company's sales are maintained in the first or second place in the market. Xylem's pump business (sold primarily to power companies) is a sticky and profitable business that provides the capital to invest in more innovative solutions such as smart meters. In mid-2023, Xylem completed his acquisition of Evoqua, gaining a leading position in the US water treatment business. We believe we are at the beginning of an attractive revenue cycle. Smart meter sales are recovering from supply chain issues, cost and revenue synergies from acquisitions are in their early stages, and a newly hired (and well-regarded) CFO is looking to drive much-needed profit growth. should be helpful. Meanwhile, the growing demand for solutions to water sustainability challenges is likely to continue as a strong trend in the coming years.
As always, the smart money appears to be recognizing broader trends that could help industrial machinery stocks position themselves for years of growth. As a result, we decided to focus on some such stocks. Notable names were Eaton Corporation plc (NYSE:ETN), General Electric Company (NYSE:GE), and Parker Hannifin Corporation (NYSE:PH).
Factory floor full of professional pharmaceutical manufacturing machines and workers.
our methodology
To create our list of the best industrial machinery stocks, we ranked the most valuable specialty industrial machinery and heavy machinery stocks by the number of hedge funds that bought the stock in Q4 2023 and singled out the top stocks. Ta.
For these best industrial machinery stocks, we used hedge fund sentiment. The top 10 consensus stocks selected by hedge funds have outperformed the S&P 500 index by more than 140 percentage points over the past 10 years (Please see here for the detail). That's why we pay close attention to this often ignored metric.
Best industrial machinery stocks to invest in
10. Otis Worldwide Corporation (NYSE:OTIS)
Number of hedge fund investors in Q4 2023: 38
Otis Worldwide Corporation (NYSE:OTIS) is a leading American specialty industrial machinery company headquartered in Farmington, Connecticut. We mainly manufacture and sell elevators. The company scored a major win in March 2024 when it was awarded a 10-year contract to service the Burj Khalifa.
During the fourth quarter of 2023, 38 out of 933 hedge funds profiled by Insider Monkey bought Otis Worldwide Corporation (NYSE:OTIS) stock. Terry Smith's Fundsmith LLP was the company's largest investor, investing $576 million.
Otis Worldwide Corporation (NYSE:OTIS), like General Electric Company (NYSE:GE), Eaton Corporation plc (NYSE:ETN), and Parker Hannifin Corporation (NYSE:PH), is This is the top industrial machinery stock that has been accumulating. Inside.
9. PACCAR Inc (NASDAQ:PCAR)
Number of hedge fund investors in Q4 2023: 38
PACCAR Inc (NASDAQ:PCAR) manufactures and sells heavy-duty agricultural and construction trucks. The company's stock has performed well so far this year, with shares up 28% year-to-date as the first quarter ends. Overall, the company has exceeded analysts' EPS estimates in each of the last four quarters, and the stock is rated a Buy on average.
Insider Monkey examined the Q4 2023 portfolios of 933 hedge funds and found that 38 funds were buying the company's stock. PACCAR Inc (NASDAQ:PCAR)'s largest hedge fund shareholder is Ken Fisher's Fisher Asset Management, with $479 million worth of stock.
8. Cummins Inc. (NYSE:CMI)
Number of hedge fund investors in Q4 2023: 39
Cummins Inc. (NYSE:CMI) is a leading American company that sells industrial-grade engines and related products. The company has struggled financially recently, missing analyst EPS estimates in three of the last four quarters. Investors in the company received favorable terms earlier this month, with the possibility of exchanging shares at a discount through a share-for-stock exchange offer.
By the end of last year's fourth quarter, 39 of the 933 hedge funds profiled by Insider Monkey had invested in Cummins Inc. (NYSE:CMI). Ken Fisher's Fisher Asset Management was the largest investor, investing $619 million in the company.
7. Rockwell Automation Company (NYSE:ROK)
Number of hedge fund investors in Q4 2023: 43
Rockwell Automation, Inc. (NYSE:ROK) is one of the world's largest industrial machinery companies. The company manufactures and sells sensors and other products for industrial automation. In March 2024, the company unveiled a new customer center in Singapore targeting Asian companies and their industrial automation needs.
As of the end of December 2023, 43 of the 933 hedge funds surveyed by Insider Monkey were investors in the company. Rockwell Automation, Inc. (NYSE:ROK)'s largest hedge fund shareholder is Ken Fisher's Fisher Asset Management, with a stake of $179 million.
6. Caterpillar Inc. (NYSE:CAT)
Number of hedge fund investors in Q4 2023: 48
Caterpillar Inc. (NYSE:CAT) is a well-known American company that manufactures and sells the world's largest mining and construction equipment. The stock has an average rating of “buy” and an average price target of $366.
Of the 933 hedge funds surveyed in Insider Monkey's Q4 2023 survey, 48 funds held Caterpillar Inc. (NYSE:CAT) stock. Ken Fisher's Fisher Asset Management was the largest investor, with 8.1 million shares worth $2.4 billion.
Caterpillar Inc. (NYSE:CAT), Eaton Corporation plc (NYSE:ETN), General Electric Company (NYSE:GE), and Parker Hannifin Corporation (NYSE:PH) are among the top industrial machinery stocks among hedge funds.
Click to keep reading to see the 5 best industrial machinery stocks to invest in.
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Disclosure. none. 10 best industrial machinery stocks to invest in Originally published on Insider Monkey.
