When the shuttered American economy reopens, companies will need resources to get things moving again — both power and raw materials. That’s where the industrials come in.
This concept goes back to Charles Dow himself. When the Dow Jones Industrial Average was launched in 1896, it contained just 12 companies that focused almost entirely on raw materials such as cotton, tobacco, oil, and railroads. The DJIA typically serves as an accurate barometer for the U.S. economy at large because industrial performance closely follows the overall economic growth rate.
Of those original 12 companies, General Electric is the last one standing, and it’s no longer in the DJIA. And the 30 stocks in the average today are more diverse than their forebears.
So these industrial companies aren’t the titans that once ruled the U.S. markets, but they’re ready for a run:
- Evoqua Water Technologies Corp (NYSE:AQUA)
- Casella Waste Systems Inc (NASDAQ:CWST)
- KBR Inc (NYSE:KBR)
- Exponent Inc (NASDAQ:EXPO)
- Tetra Tech (NASDAQ:TTEK)
- Jacobs Engineering Inc (NYSE:J)
- TC Energy Corp (NYSE:TRP)
These 7 industrial stocks to buy are all A-rated by my Portfolio Grader, making these Growth Investor plays a good value for investors.
Evoqua Water Technologies Corp (AQUA)
Evoqua Water Technologies specializes in water treatment solutions for heavy industry and water system management.
It’s cliché to say that water is the source of life, but it’s also the source of industry. From fundamental resources like mining and energy to high-tech sectors like chip fabrication and pharmaceuticals, water is a crucial input.
To satisfy the diverse needs of its clients, AQUA has acquired a number of powerful brands that serve many of these industries. It is a one-stop shop for industrial water needs, making the company unique in the industry in that aspect.
Its market cap is about $1.8 billion, so it’s not a gigantic firm, but it does have a strong client list. And as water resources become less available, creative solutions on how to manage them will become increasingly important.
The stock is up 18% in the past 12 months, and up 41% over the past week.
Casella Waste Systems Inc (CWST)
Casella Waste Systems has been a favorite of mine for a while now.
It manages the other side of the production stream, the waste.
Founded by two brothers in 1975 Vermont, CWST is now a regional player in the waste management business. The stock now sports a $2.2 billion market cap.
Now it’s not playing in the same league as the major national waste management companies, but it is a key player in its region. And that’s especially important now that Asia has stopped taking American trash and recycling.
Also, when the big companies are back in acquisition mode, a firm like CWST would be a great takeover target, likely at a healthy premium. That’s a huge bullish catalyst — and it requires a target with strong growth prospects like what I focus on at Growth Investor.
The stock is up 32% in the past 12 months and has come back strong in the past week.
KBR Inc (KBR)
KBR has been around in one form or another since 1901. And the company has been a leading engineering and construction firm since the very beginning.
In 1998, MW Kellogg’s engineering business merged with the engineering firm of Brown & Root Engineering and Construction to form KBR, one of the world’s leading engineering, procurement and construction businesses.
Today KBR has over 80,000 employees in 80 countries, with operations in 40 of those countries.
It works on big projects for the U.S. government as well as smaller projects with local governments. It builds offshore oil rigs and football stadiums. And now it is using its experience to move into intelligent design and software for larger systems such as highways and aerospace.
The company currently has a market cap of $3 billion and returned 5.7% over the past year while also distributing a 1.9% dividend. KBR will likely be the beneficiary of at least a few major infrastructure projects in coming quarters.
Exponent Inc (EXPO)
Exponent is an engineering and scientific consulting firm working on regulatory, engineering, science and business issues, including sorting out some of the challenges brought about by COVID-19.
The company was started in 1989 and has since built a strong reputation in the space. And given the fact that the company is headquartered in Menlo Park, right outside of Silicon Valley, it has built both a highly qualified staff and an impressive client list of tech firms, as well as well biotech research companies.
That clearly makes EXPO a play on COVID-19 right now. And while it may not be a direct winner — i.e., the company finding a vaccine — it will be engaged by a number of firms in the effort to solve that question, as well as the deployment and other logistic aspects of containment and remediation. Going forward, I expect the company’s strong fundamentals and popularity on Wall Street to pave the way for gains.
The stock is up 25% in the past 12 months and even its short-term performance has been strong. And I’ve got more where that came from.
Tetra Tech (TTEK)
Tetra Tech is an engineering services company that helps build a wide variety of projects around the world.
It works on smart buildings, aquifer replenishment in water-challenged places, deepwater wind farms and many other similar projects.
These projects aren’t simply about feel-good engineering, they’re about developing sustainable and efficient solutions so that towns and cities can thrive over the long term. This is the new way of thinking when rebuilding infrastructure projects or starting new ones.
And TTEK has projects around the world, so it’s not limited to just serving those needs in the U.S. Developing nations are building cities from scratch using these principles and TTEK is a leader in the field.
The stock is up nearly 30% in the past 12 months, and is gaining momentum to the upside. It also delivers a small 0.8% dividend, helpful for reinvesting.
Jacobs Engineering Inc (J)
Jacobs Engineering has been around since 1947 and it’s one of the biggest firms on the block, sporting a $10 billion market cap.
At this point, the company does everything from rebuilding outdated infrastructure to alleviating water scarcity to building platforms to prevent cyberattacks. It’s a full-service firm that operates in both the traditional engineering solutions spaces, as well as the newer computer engineering and solutions spaces. Just this week it won a 3-year contract for cybersecurity in the U.S. Patent and Trade Office.
It has over 55,000 employees, does about $13 billion in business annually and has a $22 billion backlog. That backlog is a bullish number because it means these are long-term projects and it keeps bringing in new contracts — growth is strong. That’s what I like to see in a Growth Investor stock!
Jacobs has 400 offices around the world and operates in more than 40 countries.
J stock is up 4.5% in the past year, and it’s making all the right moves during the COVID-19 crisis.
TC Energy Corp (TRP)
TC Energy Corp (NYSE: TRP) is a Canada-based pipeline company with operations throughout Canada, the U.S. and Mexico. It’s the lead contractor on the famous XL Pipeline that links many of the Bakken shale fields in the Dakotas, Montana and western Canada.
TRP has natural gas pipelines as well as oil, and also moves tar sands products from northern Canada. It also has storage and distribution facilities across all three nations as well.
It operates a midstream energy company, which means it’s a toll taker that gets paid on the volume moving through its pipes rather than by the price of energy. If there’s demand, then it makes more money meeting that demand with supply.
While the energy markets have been hit hard in recent weeks, the stimulus package to kickstart the US economy and the negotiations going on between Russia and OPEC should help raise prices so producers can get back to producing.
The stock is up about 3% in the past 12 months and has rallied 33% in the past month. It also delivers a solid 5.1% dividend.
When it comes to energy exposure, it’s going to be very prudent to be highly selective in your investments. That’s just as true in other parts of the market as well! One mega-trend that I expect to pick up major steam going forward is the nationwide upgrade to 5G wireless.
The 5G Buildout Is an Incredible Opportunity for Investors Right Now
Within two years, most cell phones will be 5G enabled and be able to wirelessly handle television streaming. With 5G, we’ll have cable modem speeds on any device; no need to plug in. That’s a big deal for rural areas … the very same areas that are also key to President Donald Trump’s reelection. So by pushing 5G over the goal line, Trump will deliver a big win for his base — and strike a blow against Chinese rivals like Huawei Technologies.
But, in the big picture, 5G is about much more than trade wars and faster downloads. Because 5G is 100 times faster than 4G, it’ll allow your internet devices to work in real time. That advancement is a game changer for tech companies.
With the 5G infrastructure market set to grow at an annual rate of 67% over the next 10 years, the entire market will go from $780 million to nearly $48 billion. This buildout is where I see opportunity with 5G stocks now.
Cable companies can do their best to fight back with fiber optics … but they can’t compete with the convenience of a smartphone, once it’s got ultra-fast 5G. That’s how my 5G infrastructure play will capture more market share from the broadband cable companies.
The stock I’m targeting is a favorite on Wall Street, and it has strong fundamentals, too — making it an A-rated “Strong Buy” in my Portfolio Grader system.
When you do, you’ll see how to claim a free copy of my new stock report, The Netflix of 5G, which has full details on this company — and what makes it such a great investment.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.