Top Industrial Stocks for November 2022

LPX, CPA, and LMT are top for value, growth, and momentum, respectively

The industrial sector includes companies that produce machinery, equipment, and supplies used in construction and manufacturing, as well as those that provide related services. These companies are closely tied to the economy, and their business volume often falls sharply during recessions, though each industrial subsector often performs differently.

Well-known industrial sector companies include Lockheed Martin Corp., Honeywell International Inc., and 3M Company. The industrial sector also includes companies that provide air transportation services, such as United Airlines Holdings Inc.

Industrial stocks, represented by an exchange-traded fund (ETF)—the Industrial Select Sector SPDR ETF (XLI)—have outperformed the broader market, providing investors with a total return of -8.9% compared with the Russell 1000's total return of -16.7% over the past 12 months. These market performance numbers and all statistics in the tables below are as of Oct. 27, 2022.

Here are the top three industrial stocks with the best value, the fastest growth, and the most momentum.

Best Value Industrial Stocks

These are the industrial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you're paying less for each dollar of profit generated.

Best Value Industrial Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Louisiana-Pacific Corp. (LPX) 58.05 4.3 3.5
Builders FirstSource Inc. (BLDR) 60.86 9.5 4.2
Ryder Systems Inc. (R) 82.00 4.1 5.1

Source: YCharts

  • Louisiana-Pacific Corp.: Louisiana-Pacific makes building materials and engineered wood products. The company provides oriented strand board sheathing, siding and trim, I-joists, laminated veneer lumber, and similar products. Louisiana-Pacific announced a quarterly dividend approved by its board of directors on Oct. 28. The dividend of $0.22 per share will be payable on Dec. 1 for stockholders on the record as of Nov. 9.
  • Builders FirstSource Inc.: Builders FirstSource makes and distributes building products and provides integrated services to professional home builders. It manufactures roof and floor trusses, wall panels, stairs, and vinyl windows. It also manufactures precision framing and visualization tools for architectural design. Builders FirstSource announced on Sept. 1 that it closed its $340 million acquisition of Trussway, a provider of pre-fabricated roof and floor trusses and other products. Builders FirstSource will expand its footprint by integrating Trussway's six U. S. manufacturing plants.
  • Ryder Systems Inc.: Ryder Systems is a fleet management and transportation company. Ryder provides leasing and maintenance for trucks and trailers. They also offer dedicated turnkey transportation management for their customers. On Oct. 26, Ryder Systems released its Q3 2022 earnings results. Net earnings increased by 17.1%, as well as solid revenue growth. Accelerated earnings growth within the company's transportation and supply chain segments helped drive performance.

Fastest Growing Industrial Stocks

These are the top industrial stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are factors that are critical to the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs), which may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Fastest Growing Industrial Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Copa Holdings S.A. (CPA) 74.62 3.0 356.1 127.9
AECOM (ACM) 73.86 10.3 800.0 -4.9
United Airlines Holdings Inc. (UAL) 42.99 14.1 98.6 66.2

Source: YCharts

  • Copa Holdings S. A.: Copa Holdings is a Panama-based airline company that provides cargo and low-cost passenger services through its subsidiaries Copa Airlines and AeroRepublica. The company provides air service primarily to cities in Central America, as well as to destinations in Mexico, Venezuela, and Cuba. On Aug. 3, Copa Holdings released Q2 earnings for 2022. Net income increased over four-fold on top of positive revenue growth compared to the previous year.
  • AECOM: AECOM is an infrastructure consulting company. That focuses on providing businesses and government organizations with architectural design, planning, and construction programs. In addition, the company has a real estate investing and management segment called AECOM Capital.
  • United Airlines Holdings Inc.: United Airlines is a cargo and passenger airline transportation company. United also offers catering, aircraft maintenance, and ground handling for third parties.

Industrial Stocks with the Most Momentum

These are the industrial stocks that had the highest total return over the past 12 months.

Industrial Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Lockheed Martin Corp. (LMT) 471.93 123.7 46.6
Avis Budget Group Inc. (CAR) 241.35 11.6 45.4
Valmont Industries Inc. (VMI) 312.48 6.7 40.5
Russell 1000 Index N/A N/A -16.7
Industrial Select Sector SPDR ETF (XLI) N/A N/A -8.9

Source: YCharts

  • Lockheed Martin Corp.: Lockheed Martin is a defense and aerospace company. Its primary customer is the Department of Defense for the U.S. Government. The company operates multiple segments, including Missile and Fire Control, Aeronautics, and Space. On Oct. 18, Lockheed Martin reported better than expected earnings for Q3 2022. With its net income increasing nearly three-fold. Along with similar total revenue compared with Q3 2021. In addition, the company authorized share repurchases totaling $14 billion.
  • Avis Budget Group Inc.: Avis Budget Group provides vehicle rentals and other services. Its primary brands include Avis, Budget, and Zipcar. Across its brands, it operates over 11,000 locations in about 180 countries.
  • Valmont Industries Inc.: Valmont Industries provides fabricated metals for infrastructure and agriculture products. In addition, the company manufactures engineered components for highway safety products and center-pivot irrigation equipment.

Advantages of Investing in Industrial Stocks

Established Businesses: Many industrial companies have been in business for many years with a proven track record of successfully navigating the economic cycle through boom-and-bust periods. If an industrial company has generated consistent shareholder returns for decades, there's a good chance it will continue to do so in the future. For example, aerospace giant The Boeing Company (BA) has weathered many challenges over its 106-year history, but its share price has trended mostly higher since listing on the New York Stock Exchange (NYSE) in 1962.

Infrastructure Spending: The sector stands to benefit from increased national infrastructure spending as the economy recovers from the pandemic. In November 2021, lawmakers passed a $1.2 trillion infrastructure bill, meaning a windfall of sales for industrial companies that provide construction equipment and services, such as Fluor Corporation (FLR), Caterpillar Inc. (CAT), and Jacobs Engineering Group Inc. (J).

Risks of Investing in Industrial Stocks

Global Economy: Many industrial stocks operate internationally, making them exposed to a slowdown in global economic growth. An increasing number of U.S. industrial companies, such as 3M Company and General Motors Company (GM), generate significant revenue from China, making them particularly sensitive to the health of the Chinese economy. For example, 3M warned in June 2022 that ongoing lockdowns in the world's second-largest economy would wipe $300 million from revenues in the second quarter. Industrial companies have also faced compounding supply chain issues this year arising from Russia's invasion of Ukraine.

Tariffs: Industrial companies can face challenges from trade tariffs resulting from geopolitical tensions between countries. For instance, many U.S. and Chinese industrials were caught in a tit-for-tat trade war between Washington and Beijing in 2018 when the two economic superpowers disagreed over trade practices. According to research complied by American Action Forum, U.S. tariffs currently affect over $350 billion of imports and exports, which increases the cost of doing business for industrial companies. (American Action Forum. "The Total Cost of U.S. Tariffs.")

Article Sources
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  1. YCharts. "Financial Data."

  2. Louisiana-Pacific Corp. "Louisiana-Pacific Announces Quarterly Dividend."

  3. Builders FirstSource Inc. "BLDR Closes Acquisition of Trussway."

  4. Ryder Systems Inc. "Ryder Systems Reports Q3 2022 Earnings Results."

  5. Copa Holdings S.A. "Copa Holdings Releases Q1 2022 Earnings Results."

  6. Copa Holdings S.A. "Copa Holdings Releases Q2 2022 Earnings Results."

  7. Lockheed Martin Corp. "Lockheed Martin Reports Q3 2022 Earnings Results."

  8. Macrotrends. "Boeing - 60 Year Stock Price History | BA."

  9. Reuters. "3M Expects $300 Mln Revenue Hit From China COVID Lockdowns."

  10. American Action Forum. "The Total Cost of U.S. Tariffs."

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