May 22, 2020
Industrial stocks are cyclical in nature. With large potential stock market gains and a high level of volatility, these stocks are often considered to have a mid-level range of risk. When the economy is robust, industrial stocks tend to perform well. Geopolitical tension or stagnation of global growth, however, can cause a downturn in the performance of these stocks.
Companies that produce and/or distribute the supplies, machinery, equipment and other necessities that are used in industries like construction, defense and manufacturing are industrials. These companies provide a vital service that underpins the entire economic mechanism of the United States. Without their contributions, vital services such as the nation's defense, highways and buildings would falter to a halt.
As the backbone of the country's productivity and many industrial stocks are some of America's best-loved brands. Their longevity attests to how crucial they are to the smooth operation of the country's infrastructure.
For reference, the industrial sector had a price/earnings (P/E) ratio of 22.15 for 2019 with a P/E estimate for 2020 of 41.74. Its earning per share (EPS) growth was $5.08 with a return on investment of 8.97 percent.
John Deere (Tii:DE)
John Deere is a household name brand that is best known for manufacturing farming equipment. Today, though, the brand is probably best known for its tough and dependable tractors and other equipment that meets the needs of homeowners across the country. Though the agricultural equipment industry as a whole is struggling, Deere & Company boasts a $42 billion market capitalization, dominating all other players.
General Electric (Tii:GE)
Another household name, General Electric is an American company that was found in 1892 in New York by Thomas Edison, J.P. Morgan and three other men. It has long been a household name due to being a manufacturer and distributor of appliances. More recently, the company moved into the lending arena with its GE Capital brand. GE recently announced the restructuring of some of its debt in an effort to improve its financial condition.
Without industrial stocks, the country's productivity would grind to a halt. As an investment sector, they deserve consideration.
ABB is a fascinating and diverse company with a portfolio of five businesses: electrification, industrial automation, motion, robotics and discrete automation, and power grids. They are divesting the low-margin power grids business to focus on the other four segments, and its business line diversity serves more than 30 end markets with at least 30% exposure in each of the Americas, Europe, and Asia-Pacific/Middle East/Africa regions.
Ford Motor (Tii:F)
Ford Motor Company is a global company based in Dearborn, Michigan. The company designs, manufactures, markets and services a full line of Ford cars, trucks, SUVs, electrified vehicles and Lincoln luxury vehicles, provides financial services through Ford Motor Credit Company and is pursuing leadership positions in electrification; mobility solutions, including self-driving services; and connected services. Ford employs approximately 188,000 people worldwide.
General Motors (Tii:GM)
GM is home to many notable brands such as Buick, Cadillac, GMC and Chevrolet. Headquartered in Detroit, Michigan, GM boasted revenue of $137 billion last year and sold around 7.7 million vehicles under various brands. With price breaks at dealerships on the Chevy Bolt and their recent announcements around electric trucks being key to their zero-emissions future, GM is poised to align their values with more of an ESG focus. The GMC HUMMER EV will be their first entry, but it won’t be alone for long. GM plans to offer not just one pickup, but multiple models with multiple variants, for multiple customers.
*Now Shyft Group (Tii:SHYF)
Notable for manufacturing the chassis for the RV brand, Jayco, as well as other specialty vehicles, Shyft is an American company based in Michigan. More than 40 years ago, four laid-off engineers decided to customize products for a specific customer and deliver high-quality service and workmanship for a fair price. Today, Shyft is is the North American leader in specialty vehicle manufacturing, assembly, and upfit for the commercial, retail, and service specialty vehicle markets.
Their customers include first-to-last mile delivery companies across vocations, federal, state, and local government entities; the trades; and utility and infrastructure segments. The company is organized into two core business units: Shyft Fleet Vehicles and Services and Shyft Specialty Vehicles. Today, its family of brands include Utilimaster, Royal Truck Body, Strobes-R-Us, Spartan RV Chassis, Builtmore Contract Manufacturing, and corresponding aftermarket provisions.
Boeing Co. (Tii:BA)
Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners, defense, space and security systems, and service provider of aftermarket support. As America’s biggest manufacturing exporter, the company supports airlines and U.S. and allied government customers in more than 150 countries. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. The Boeing Company and its subsidiaries had more than 143,000 employees working in 50 states as of December 31, 2019.
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