These days, while most of the business media attention is centered around the precious metals and technology sectors, there are other market niches that are looking attractive. The capital goods sector is one of them. In fact, this group may be one of the least sexy and most often overlooked corners of the investment universe, mostly because many folks aren't sure of what's included under the capital goods title. In a nutshell, the sector is comprised of companies doing business in aerospace and defense, construction, industrial machinery, and engineering and building products.

IN PICTURES: 9 Simple Investing Ratios You Need To Know

Below we highlight three capital goods producers that have recently been flashing very strong fundamentals. From the aspect of dividend yield, P/E ratio, price to book and price to sales ratios, this trio leads the pack.

Irish Tumbler
CRH PLC (NYSE:CRH) is headquartered in Dublin, Ireland and operates a diversified building materials business. CRH stock has fallen significantly this year, down more than 35% since New Year's. That compares very poorly with the rest of the sector as represented by the Vanguard Industrials ETF (NYSE:VIS), which is up nearly 17% YTD and the broad market, as represented by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA). In late August, the company was hit by a downgrade from Merrill Lynch, from a buy rating to neutral.

Nonetheless, CRH may now be the ideal choice for value investors should the global growth story continue or we see more infrastructure stimulus programs in the face of stagnant growth. CRH trades with a dividend yield of 2.7 % and sports a P/E of 16.6. The price to book on the stock is 0.87 and price to sales 0.54, both attractive value numbers.

Steel Rail Value
Harsco Corporation (NYSE:HSC) is a diversified provider of engineered products and industrial services, best known for its manufacture of products for the rail industry. Year to date, the company's shares are also down 28%. But like CRH, the fundamentals indicate a potential turnaround play. P/E on HSC is 18.5 and the yield is 3.5%. price to book and price to sales are 1.24 and 0.61 respectively.

War Profiteer
Northrop Grumman Corporation (NYSE:NOC) is a security-based business involved in producing everything from submarines and aircrafts to satellites and electronic intelligence systems. The company's stock has performed well YTD, up 15.5%. The shares yield slightly less than 3% and trade with a multiple of 10 times last year's earnings. (High-dividend stocks make excellent bear market investments, but the payouts aren't a sure thing. Check out Dividend Yield For The Downturn.)

NOC has very competitive P/B and P/S valuations, as well, the former coming in at 1.40 while the latter sits at 0.54.

The Wrap
The capital goods sector won't be manufacturing anything you find at the mall, but investors should be aware of the potential for these stocks to fly should the current stagnant economic situation begin to ease.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Bonds & Fixed Income

    The Top 5 High Yield Bond Funds for 2016

    Learn about mutual funds and ETFs that invest in high-yield bonds. Read about the risks and rewards associated with investing in high-yield bonds.
  2. Chart Advisor

    Rare Earth Metals Continue To Struggle

    Rare earth metals are used in many of today's products and many investors are wondering if consumer demand is enough to offset the global economic slowdown. We'll take a look at how they are ...
  3. Mutual Funds & ETFs

    3 ETFs to Consider Before an Interest Rate Hike

    Learn about potential impacts of the Federal Reserve boosting interest rates and three ETFs that can help you capitalize on the perceived December increase.
  4. Mutual Funds & ETFs

    A Complete Guide to Tax Loss Harvesting With ETFs

    Using exchange-traded funds (ETFs) to harvest tax losses can be a smart way to maximize your portfolio's tax efficiency.
  5. Mutual Funds & ETFs

    Why ETFs Are a Smart Investment Choice for Millennials

    Exchange-traded funds offer an investment alternative to cost-conscious millennials who want to diversify their portfolios with less risk.
  6. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  7. Mutual Funds & ETFs

    Should Investors Take a BITE Out of This New ETF?

    ETF BITE offers a full menu of restaurants. Is now the right time to invest?
  8. Financial Advisors

    5 Things All Financial Advisors Should Know About ETFs

    Discover five things all financial advisors should know about ETFs, including when ETFs may be a better choice for your clients than mutual funds.
  9. Stock Analysis

    The Top 5 ETFs to Track the Nasdaq in 2016

    Check out five ETFs tracking the NASDAQ that investors should consider heading into 2016, including the famous PowerShares QQQ Trust.
  10. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center