U.S. manufacturing activity remained in expansion territory for the ninth consecutive month in September, with new orders, production and backlogs pointing to continued momentum. Meanwhile, the Customers’ Inventories Index stayed below 50%, indicating that customer inventories remain too low. This trend could support future production as replenishment demand improves.

The backdrop remains favorable for the Zacks Industrial Products sector. According to the latest Earnings Trends report, estimates for the sector have been moving higher for the third quarter of 2026. The sector is projected to deliver earnings growth of 13.1% for the quarter and 11.6% for 2026, making it one of the seven sectors expected to register double-digit earnings growth this year. It would be ideal to invest in industrial stocks like Park-Ohio Holdings Corp. (PKOH Quick QuotePKOH - Free Report) , MSC Industrial Direct Co., Inc. (MSM Quick QuoteMSM - Free Report) , W.W. Grainger Inc. (GWW Quick QuoteGWW - Free Report) , Lincoln Electric Holdings Inc. (LECO Quick QuoteLECO - Free Report) and EnerSys (ENS Quick QuoteENS - Free Report) . 

U.S. Manufacturing Momentum Holds Firm

The ISM Manufacturing PMI came in at 54.5% in September compared with 54.6% in August. Despite the modest decline, September marked the ninth consecutive month of manufacturing expansion following a 10-month contraction period. Five of the six largest manufacturing industries expanded, including transportation equipment, chemical products, computer and electronic products, machinery, and food, beverage and tobacco products.

The New Orders Index rose to 55.3% in September from 53.7% in August, remaining in expansion territory for the ninth straight month. The Production Index declined to 56.7% from 58.3% but continued to signal expansion for the 11th consecutive month. The Backlog of Orders Index climbed 4.6 percentage points to 56.4%.

The Employment Index gained 1.5 percentage points to 52.7%. The Inventories Index fell to 48.6% from 50.6% in August. The Customers’ Inventories Index declined to 41.6% from 42.8% and remained in “too low” territory. Lean customer inventories are generally supportive of future production, as improving demand could prompt manufacturers to rebuild stock levels.

However, cost pressures remain a challenge. The Prices Index remained elevated at 77.9%, indicating higher raw-material prices for the 24th consecutive month. Steel, aluminum, copper, electrical components and electronic components were among the materials experiencing price increases or supply constraints. Tariffs and increases in petroleum-based products as a result of the Middle East conflict are adding to cost pressures. In response, industry participants are focusing on pricing actions, cost optimization, productivity gains and diversification of supplier networks to offset these pressures. 

Industry Outlook Remains Positive Amid Cost Challenges

The manufacturing recovery remains encouraging, supported by lean customer inventories, expanding new orders and sustained production growth. These trends provide a favorable foundation for industrial activity in the coming months. Nevertheless, elevated input costs, tariffs, supply-chain constraints and geopolitical uncertainty could moderate the pace of recovery.

ISM's 2026 forecast calls for 8.4% growth in manufacturing revenues, 4.9% growth in capital expenditures and a 9.7% increase in production capacity, supporting the case for industrial stocks positioned to benefit from renewed manufacturing investment. Manufacturing employment is also expected to increase 1.4% in 2026.

5 Industrial Products Stocks to Buy

With the help of our Zacks Stock Screener, we have identified five attractive stocks. The shortlisted companies sport a Zacks Rank #1 (Strong Buy) or carry Rank #2 (Buy) with a VGM Score of A or B. The Zacks Consensus Estimate for 2026 and 2027 earnings has moved higher over the past 60 days and indicates positive growth. You can see the complete list of today’s Zacks #1 Rank stocks here. 

These stocks have also outperformed the sector over the past six months, as shown in the chart below.

Image Source: Zacks Investment Research

Park-Ohio Holdings: The company delivered record revenues in the first half of 2026 backed by strong year-over-year sales growth in all three business segments. The company raised its outlook for 2026, reflecting revenue growth and continued margin expansion. This is supported by continued strong AI-related demand, higher aerospace and defense production, and improving activity in key industrial markets in Supply Technologies; strong backlog in Engineered Products resulting from increasing demand from electrical steel, aerospace and defense and oil and gas markets.

Park-Ohio Holdings continues to invest in automation, information systems and vertical integration, while optimizing its business portfolio. The ongoing strategic review of the Southwest Steel Processing business reflects management's focus on reallocating capital toward higher-growth, higher-margin operations. These initiatives are expected to improve operating efficiency, strengthen cash flow generation and support long-term earnings growth.

The Zacks Consensus Estimate for Park-Ohio Holdings’ fiscal 2026 earnings suggests year-over-year growth of 20.7% and the estimate for fiscal 2027 projects growth of 12.8%. Both the estimates have moved up in the past 60 days. The company has a trailing four-quarter earnings surprise of 1.33%, on average. PKOH has an estimated long-term growth of 12% and currently sports a Zacks Rank of 1 with a VGM Score of A. 

MSC Industrial: The company delivered the third consecutive quarter of year-over-year operating margin expansion in the fiscal third quarter of 2026 (ended May 31, 2026), supported by structural cost reductions. Management is advancing its “Mission Critical” strategy, focused on profitable growth, market share gains and productivity. The current phase emphasizes strengthening core customer and OEM fastener relationships, improving supply-chain efficiency, enhancing digital capabilities and reducing operating expenses.

Recent initiatives include web price realignment, expanded marketing, E-commerce enhancements and a data-driven sales optimization program. In fiscal 2026, the company is further leveraging analytics and organizational alignment to deliver a more personalized customer experience and improve end-to-end efficiency. The company plans to selectively pursue strategic acquisitions that expand its markets and enhance its product and service offerings.

The Zacks Consensus Estimate for MSM’s fiscal 2026 earnings suggests year-over-year growth of 20.5% and the estimate for 2027 projects year-over-year growth of 15.1%. Both the estimates have moved up in the past 90 days. The company has a trailing four-quarter earnings surprise of 4.8%, on average. It currently carries a Zacks Rank of 2 and a VGM Score of B.

Grainger: The company continues to benefit from strong volume growth in its High-Touch Solutions segment and expanding customer activity within the Endless Assortment segment. High-Touch Solutions is seeing gains from a more favorable product mix, while repeat customer growth at MonotaRO and Zoro is supporting performance in Endless Assortment. Higher sales volumes and pricing initiatives are expected to contribute to revenue growth in the coming quarters. 

Grainger continues to invest in e-commerce, digital capabilities and supply-chain execution to improve the end-to-end customer experience. In August 2026, it acquired technology, intellectual property and talent assets from Adroit Worldwide Media for $210 million. The technology is intended to improve MRO inventory management, product availability and labor efficiency, with a commercial pilot planned over the next several months.

The Zacks Consensus Estimate for fiscal 2026 earnings for Grainger indicates year-over-year growth of 12.2%.  The estimate for fiscal 2027 suggests growth of 17.2%. Both the estimates have been revised upward over the past 90 days. GWW currently has a trailing four-quarter earnings surprise of 5.9%, on average. It has an estimated long-term earnings growth rate of 12.2%, a Zacks Rank of 2 and a VGM Score of B. 

Lincoln Electric Holdings: The company is targeting high single-digit to low double-digit percentage sales growth over 2026-2030.  Organic sales are expected to increase at a mid-single-digit percentage rate.  The Americas Welding segment is expected to lead with a mid- to high single-digit percentage organic growth rate, backed by regional secular and cyclical tailwinds. Automation sales are expected to increase at twice the rate of core sales in the region. The International Welding segment is expected to grow at a low-single-digit to mid-single-digit rate, mainly driven by the Middle East and Asia Pacific, which have high levels of project activity.

Lincoln Electric projects a mid-single-digit percentage growth rate in Harris Products Group from ongoing HVAC sector growth, a strategic expansion of fabricated solutions for targeted industrial applications and expectations for an improvement in residential and retail channel trends. LECO is also targeting more than 20% operating margin by 2030. RISE initiatives are expected to add 100-125 basis points to the company’s margin profile through 2030. Lincoln Electric continues to use acquisitions to expand its capabilities and geographic reach, with recent transactions strengthening its automation and maintenance-solutions portfolio.

The Zacks Consensus Estimate for Lincoln Electric’s earnings for both fiscal 2026 and fiscal 2027 has moved up over the past 60 days. The estimate for 2026 suggests year-over-year growth of 13.3% and the estimate for 2027 suggests growth of 11.2%. The company has a trailing four-quarter earnings surprise of 3.9%, on average. It has an estimated long-term earnings growth rate of 15% and currently carries a Zacks Rank of 2 and a VGM Score of B.

EnerSys: The company is poised to benefit from diversified demand across data centers, communications, and aerospace and defense, supported by product innovation, service expansion and a broader mix of lithium and energy-storage solutions. Cost discipline and working-capital improvements are strengthening earnings and cash generation, while lower leverage provides flexibility for growth investments and shareholder returns. EnerSys is broadening beyond traditional lead-acid batteries through lithium, battery energy storage, TPPL, power electronics and service offerings. 

The company also secured a revised Department of Energy grant of about $150 million for a planned defense-focused lithium cell campus in Greenville, SC. The facility is expected to have about one gigawatt-hour (GWh) of initial capacity. Construction is planned to begin in the first half of fiscal 2028, with full production about three years later. Management targets a mid-20% internal rate of return and expects the campus to support U.S.-based defense supply chains compliant with foreign entity of concern (FEOC) requirements.

The Zacks Consensus Estimate for EnerSys’ fiscal 2026 earnings suggests year-over-year growth of 15% and the estimate for 2027 projects year-over-year growth of 27%. Both the estimates have moved up in the past 90 days. The company has a trailing four-quarter earnings surprise of 11.5% on average, and a long-term earnings growth of 15%. It currently carries a Zacks Rank of 2 and a VGM Score of B.