Back to top

Image: Bigstock

5 Top-Rated Industrial Stocks to Add to Your Portfolio Now

Read MoreHide Full Article

As the government’s coronavirus stimulus to support households fades his year and consumers are up against higher product prices, they trimmed their spending, especially on big-ticket items.

However, industrial production in the United States continues to pick up, notching the third straight month of growth in May. Factory output, in fact, rose more than expected, indicating that the sector is displaying enough signs of improvement despite supply shortages, higher materials prices and difficulties in hiring skilled laborers.

The Federal Reserve noted that industrial output advanced at a seasonally adjusted rate of 0.8% last month. The gain was well above economists’ expectations of a rise of 0.6%, as surveyed by the Wall Street Journal, citing a Morningstar article. The article further noted that April’s gain in industrial output was revised down to 0.1% from an earlier estimate of an increase of 0.7%.

Nonetheless, in the month of May, industrial output’s biggest component – manufacturing output – rose 0.9% from the prior month, thanks to a rebound in the output of motor vehicle and parts, added the Federal Reserve. Citing a MarketWatch article, the output of motor vehicles and parts climbed 6.7% last month following a drop of 5.7% in the month of April.

Undoubtedly, last month’s jump in auto vehicle parts production indicates that the semiconductor shortage plaguing the sector isn’t severe anymore. By the way, barring autos, manufacturing output increased 0.5% in May, noted the MarketWatch article. In fact, chief U.S. economist at High Frequency Economics, Rubeela Farooqi, said that “overall, recovery in industrial output, especially manufacturing, is ongoing and is likely to be supported by demand for goods and low inventories.”

Meanwhile, per the Federal Reserve, mining and utility output advanced 1.2% and 0.2%, respectively, last month. What’s more, the overall industries’ output capacities improved in May. According to the Federal Reserve, the industrial sector’s capacity utilization came in at 75.2% last month, the highest since the coronavirus outbreak impacted the U.S. economy last year. Individually, U.S. manufacturing operated at a 75.6% capacity in May, while capacity utilization rate for mining increased to 75.2% and for utilities, it remained unchanged at 72.8%.

5 Top Industrial Stocks to Buy Right Away

With American industries along with the rest of the U.S. economy bouncing back from the coronavirus-led drubbing it took last year, it’s now prudent to invest in sound industrial stocks. American industries have however overcome supply chain issues and labor shortages. Thus, we have highlighted five such industrial stocks that possess a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Alcoa Corp. (AA - Free Report) produces and sells bauxite, alumina, and aluminum products in the United States and internationally. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up nearly 44% over the past 60 days. The company’s expected earnings growth rate for the current year is 500.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar Inc. (CAT - Free Report) is the largest global manufacturer of construction and mining equipment. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 18.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 46.3%.

W.W. Grainger, Inc. (GWW - Free Report) is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 6.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 22%.

Tennant Company (TNC - Free Report) is a world leader in designing, manufacturing and marketing solutions that empower customers to achieve quality cleaning performance and significantly reduce their environmental impact. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 19.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 49.5%.

Mueller Industries, Inc. (MLI - Free Report) manufactures and sells copper, brass, aluminum, and plastic products in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 65.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 66.7%.

Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create ""the world's first trillionaires."" Zacks' urgent special report reveals 3 AI picks investors need to know about today.  

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>