It’s an equities sector that’s often overlooked, but investors can find paths to profit with these three industrial stocks to buy for the eventual market rebound.
The U.S.-China trade war and coronavirus outbreak took a bit of a toll on U.S. industrial stocks.
However, the sector had a strong 2019 and started a solid bounce upward between trade negotiations and the COVID-19 pandemic.
That indicates the potential for companies in the industrial space to break out once the market gets back on its feet.
In fact, just before the February-March 2020 selloff, the Industrial Select Sector SPDR Fund (NYSEARCA: XLI) consistently moved up to reach a peak of around $85. XLI is an exchange-traded fund that specifically holds industrial companies.
That indicates huge potential for industrial stocks when the market posts a comeback from bear market territory.
3 Industrial Stocks to Buy for a Market Rebound
1. Idex Corp.
Market Capitalization: $11.4 billion
Annual Sales (2019): $2.4 billion
5-Year Earnings Growth: 62.4%
Annual Dividend Yield: 1.41%
We’ve all heard of the “Jaws of Life” tool firefighters use to rescue people pinned in automobiles. One of the companies behind its creation is Idex Corp. (NYSE: IEX).
But there is way more to Idex than that. It also creates products ranging from juice dispensers to technology used for fueling aircraft.
Throughout 2019, Idex shares moved upward to the tune of 51%. However, like other stocks, it tumbled in late February due to the coronavirus market crash.
But after touching on its 52-week low in March, the company has posted a nice comeback. The good news is that it’s still short of its 52-week high, giving investors the potential for strong gains.
Idex stock remains slightly undervalued with a price to earnings of 26.1, a price to sales of 4.4 and a price to book of 4.9.
Another big benefit of holding Idex is its dividend. Its current dividend yield is 1.41% and the last payout was $0.50 per share.
Because it is diversified in so many markets, Idex Corp. is one of the three industrial stocks to buy for a market rebound.
2. Honeywell International Inc.
Market Capitalization: $100 billion
Annual Sales (2019): $36.7 billion
5-Year Earnings Growth: 46.7%
Annual Dividend Yield: 2.72%
Another well-diversified industrial company is Honeywell International Inc. (NYSE: HON).
It provides industrial technology and manufacturing in four different sectors: homebuilding, aerospace, safety and performance materials.
Just like Idex, Honeywell had a strong 2019 with a 50% growth in its share price. And, also like Idex, it dropped to a new 52-week low amid the recent market crash.
But looking beyond that fall, Honeywell stock was on a consistent rise from 2017 until the crash.
It remains relatively affordable, trading at around $135 per share. The company is a bit more undervalued by Wall Street than Idex. It has a price-to-earnings ratio of 16, price to sales of 2.6 and price to book of 5.2.
Honeywell also has a higher dividend yield than Idex — currently at 2.72%. Its payout in February 2020 was $0.90 per share. That may go down slightly as businesses continue to be impacted by the coronavirus lockdown, but the dividend isn’t going away anytime soon.
Its diversity and great dividend payout makes Honeywell International Inc. one of the three industrial stocks to buy for a market rebound.
3. Masco Corp.
Market Capitalization: $10.4 billion
Annual Sales (2019): $6.7 billion
5-Year Earnings Growth: 120.6%
Annual Dividend Yield: 1.41%
When construction gets back to normal once the coronavirus lockdown is lifted, there is going to be a run on construction supplies.
Masco Corp. (NYSE: MAS) is one of the largest manufacturers of home improvement and construction products. It’s a conglomerate that has more than 20 companies and 80 production facilities around the world.
Over the course of 2019, Masco stock jumped 84% to reach a new high of around $50 per share in February 2020. It fell back in March but has since regained more than 46% of its losses in a matter of weeks.
So, like our other two companies on the list, Masco was steadily on the rise before the coronavirus crash.
The company is the cheapest stock on our list, currently trading at around $38 per share. However, it has a nearly 20% upside to reach its previous high.
Masco’s stock value is also solid with a price-to-earnings ratio of 17.5 and a price-to-sales ratio of 1.5. Additionally, in the last five years, it posted a 120% growth in earnings.
Its dividend is lower than others on the list at 1.39% annually, paying out $0.13 per share in March 2020. That was consistent from the previous two quarters.
Contractors are going to need supplies when they start building again and that’s why Masco Corp. is one of the three industrial stocks to buy for a market rebound.
Here you have three companies that have one thing in common: diversity. They have spread their business out to several areas that protect them in the event one of those sectors falls.
They have all been moving upward until the latest crash and will continue to do so when the market stabilizes.
That’s why they are the three industrial stocks to buy for the inevitable market rebound.
