The past decade was a great time to hold tech stocks. Growth investors were well-rewarded by many companies, as technology took a central position. A hit product (like the iPhone) could sell billions of units. Tech companies hit trillion-dollar valuations, while industrial stocks fell out of favor.
This year? Momentum is shifting.
Amid concerns like inflation, rising interest rates, and semiconductor shortages, there has been a broad selloff of tech stocks. When big tech stocks are making headlines in 2022, odds are, it’s because they just dropped again.
While some investors are choosing to wait it out, many are turning to industrial stocks. The time is right. In addition to the volatility in tech stocks, conditions are favoring many companies in the industrial sector. As the world begins to emerge from the global pandemic, demand for virtually all products is up. Now is the time to look at adding industrial stocks to your portfolio, and I’ve put together a list of seven great options:
- Andersons Inc (NASDAQ:ANDE)
- AdvanSix Inc (NYSE:ASIX)
- Bunge Ltd (NYSE:BG)
- Greif, Inc. Class A (NYSE:GEF)
- Icl Group Ltd (NYSE:ICL)
- Kraton Corp (NYSE:KRA)
- Cactus Inc (NYSE:WHD)
Adding to their appeal, each of these industrial stocks is highly rated in Portfolio Grader.
The Andersons (ANDE)
The Andersons started life in 1947 as a truck terminal for the American grain industry. The company still operates 70 grain terminals across the U.S. and Canada. It has also expanded into related businesses, including ethanol production, agricultural fertilizer and nutrients and the fabrication and repair of specialized railcars.
While tech stocks were flying high, this industrial stock hit its peak in 2014. However, since the market crash in 2020, ANDE stock has been rallying in a big way. To the tune of 236% growth since May 2020. Last November, The Andersons reported its third quarter earnings, delivering its strongest Q3 showing since 2014. In addition to growing demand for its services, The Andersons has been successful in paying down long-term debt. Adding to its appeal, ANDE stock also has a proven track record for paying quarterly dividends.
At the time of publication, ANDE stock earned an “A” rating in Portfolio Grader.
New Jersey-based AdvanSix is a chemical manufacturer, with three primary lines of business. It is one the world’s largest producers of Nylon resin. This material is used in a wide range of products ranging form carpet to packaging. AdvanSix is also the world’s largest single-site producer of ammonium sulfate fertilizer. With a global population that continues to grow even as extreme weather threatens many crops, fertilizer is in more demand than ever to increase crop yields. AdvanSix also manufactures chemicals that are used in industries ranging from automotive to pharmaceutical.
After being spun off from its parent company, ASIX stock began publicly trading in September 2016. It’s up 121% since that time. Based on its latest results (sales up 58% year-over-year in Q3), the momentum for continued growth is there.
Check Portfolio Grader and you’ll find that ASIX stock earns a stellar “A” rating.
Bunge is a multinational, American agribusiness company based in Missouri — although it actually got its start in Amsterdam, back in 1818. As befitting a company that does business globally and has been in agribusiness for over two centuries, Bunge is involved in a wide range of related products and services. These include processing and transportation of vegetable oils, grain elevator operation, milling and sales of wheat, corn and rice flours, sugar production, bio-energy generation and production of plant-based proteins.
I like Bunge because despite its long history, this is a company that makes big moves to adjust to changes. For example, its growing plant-based protein business, which is helping to meet the needs of companies producing plant-based burgers and other meat substitutes that are becoming increasing popular. Bunge is also very active in sustainability, a strategy that helps to keep the company ahead of the competition.
It doesn’t hurt that Bunge’s full year 2021 results showed strong performance. This included adjusted EPS that was up 56% YoY. Unlike most tech stocks, this industrial stock has started off 2022 on a positive note. So far this year, BG stock is up nearly 9%.
BG stock is currently rated as an “A” in Portfolio Grader.
Greif is a packaging company, with a presence in a huge range of markets. It makes everything from consumer retail packaging to containers for storing nuclear waste.
If we are going with the assumption that industrial stocks are entering a “buy” phase since the world is entering a period of higher demand for everything, then GEF stock is a virtual no-brainer. If it’s stored, transported, delivered, protected or displayed on a store shelf, that’s more business for Greif. GEF stock is up 17.6% over the past 12 months and the company is well-positioned to benefit from market forces that will keep that growth going in the long-term.
The current Portfolio Grader rating for GEF stock is “A.”
Icl Group (ICL)
Shares in Israel’s Icl Group are among the big performers on this list of industrial stocks. ICL stock is up 117% over the past five years, and 76% over the past 12 months.
What does the company do? Icl is involved in producing a wide range of products, but frames all of its businesses in light of sustainability. On the agricultural side, this means production of fertilizers and pest control products. On the energy side, Icl produces fluids critical to oil and gas drilling, along with advanced materials used in renewable energy storage (including in the production of EV batteries).
The focus on sustainability is a marketing advantage for Icl, and it’s also a smart way to keep growing its business. As more companies look for solutions to “green” their own production, Icl is going to be there. Sustainability also makes ICL stock in demand for ESG funds. I also like Icl’s involvement in EV battery development (the company provides the electrolyte blends that are critical to battery function). That business in particular is likely to surge as EV sales take off, and EV battery performance becomes a selling point.
ICL stock currently earns an “A” rating in Portfolio Grader.
Why is Kraton on this list of industrial stocks to buy now? One word: rubber. Actually, make that two words: synthetic rubber.
Here’s the thing. Rubber is used in a huge number of products. Tires for cars, trucks and bikes. Tubing. Insulation. Shock absorbers. Medical equipment. Seals and washers. Waterproof clothing and equipment. Adhesives. Sports equipment. The list is virtually endless. Heck, even your iPhone has rubber in it, with rubber gaskets helping to cushion components while keeping water out.
The problem is that the world’s rubber supply is in jeopardy. Climate change is hitting rubber plantations in the form of drought and flooding. Rubber trees are increasingly susceptible to disease and pests. The areas in which rubber trees can be grown in the world are limited. As a result of these factors, demand will soon outstrip supply.
The world’s problem is Kraton’s opportunity. This is a company that specializes in the production of bio-based chemicals and specialty polymers. In layman’s terms, that is synthetic rubber. When you can’t get the real thing, synthetic rubber provides an alternative.
At the time of publication, KRA stock was rated an “A” in Portfolio Grader.
It may come as a surprise, but the oil and gas industries are not dead. Far from it. They were largely written off early in the pandemic when remote work and lockdowns saw demand plummet. The spectacular surge in EV popularity over the past several years only added to the idea that we were past peak oil.
However, look at the prices at gas pumps, the scramble for natural gas in Europe and Asia, and oil prices at a seven-year high. The oil and gas sector may have peaked, but it is a very long way from being dead. After a hiatus of several years, oil well drilling and gas fracking operations are ramping back up. That means demand for wellheads will also increase. And that will be good news if you own WHD stock. Texas-based Cactus has built a business around manufacturing and servicing wellheads for onshore and offshore oil and gas drilling.
While WHD stock took it on the chin early in the pandemic, it has come roaring back — just like oil and gas demand. Since the end of March 2020, shareholders have enjoyed a return of 338%. WHD is one of the industrial stocks that may have questionable prospects 25 years down the road. However, for the foreseeable future, it’s in a good spot to deliver long-term growth.
The current Portfolio Grader rating for WHD stock is “A.”
Originally published on InvestorPlace.com
On the date of publication, Louis Navellier had a long position in ASIX and BG. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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