No matter who and what party wins out this November, the restoration of America will be a central policy point. Therefore, manufacturing stocks should be on every investor’s radar. To be sure, the sector really isn’t all that exciting: I don’t expect investors to get rich off these ideas unless they’re speculating on far out-the-money options. It’s more of a higher-probability wager.
If you’re looking for smart ideas that can pad your portfolio while you seek out more exciting fare, manufacturing stocks may be the go-to arena. Below are several ideas to consider.
Emerson Electric (EMR)
Falling under the specialty industrial machinery category, Emerson Electric (NYSE:EMR) provides various solutions for enterprises in the industrial, commercial and consumer markets. In particular, Emerson specializes in in engineering services. Under a second Trump administration, presumably pro-business policies and infrastructural investments should bolster industrial production. That should yield downwind benefits for EMR, making it one of the top manufacturing stocks to consider.
One of the advantages that Emerson carries is its already robust financial profile. Yes, the company did miss in the third quarter last year (albeit a small one). However, in the past four quarters, it posted an average earnings per share of $1.29. In contrast, the collective consensus view for this period sat at $1.18, yielding an earnings surprise of 10.48%.
It must be said that investors will pay a premium for this robust performance. Right now, EMR stock trades at 4.02X sales. In the past year, this metric landed at 3.15X. That said, analysts are expecting fiscal 2024 sales to reach $17.56 billion, up 15.8% from the prior year. Therefore, it’s a strong candidate for manufacturing stocks to buy.
Vulcan Materials (VMC)
Operating in the building materials industry, Vulcan Materials (NYSE:VMC) ranks among the most important manufacturing stocks available. Along with is subsidiaries, Vulcan produces and supplies construction aggregates, mainly in the U.S. Should Republicans assume power, they’ll likely promote infrastructural projects to keep their constituents happy. That means greater demand for concrete and similar products, boding well for VMC stock.
Financially, Vulcan is a bit of a tricky idea. In the past four quarters, the company posted an average EPS of $1.71. This figure beat the average consensus view of $1.64, yielding an earnings surprise of 1.85%. However, Q1 represented a bad miss, with EPS of 80 cents missing the consensus target by 17.5%.
Another factor to watch is the valuation. Right now, shares trade hands at 4.7X revenue. That’s noticeably higher than last year’s multiple of 3.88X. Making matters interesting is that fiscal 2024 sales calls for $7.74 billion, down 0.6% from last year.
However, the high-side estimate is aiming for $7.99 billion, with more growth projected in 2025. Trump could get these numbers up, making it a potential idea for stocks to buy.
Parker Hannifin (PH)
Another specialist in the field of specialty industrial machinery, Parker Hannifin (NYSE:PH) manufactures and sells motion and control technologies and systems. It mainly serves mobile, industrial and aerospace markets worldwide. While the company might not be a household name, it provides the important but less appreciated components that keep various industries moving. Thus, it could be one of the top beneficiaries among manufacturing stocks.
Financially, it’s an attractive wager. In the past year since Q1, Parker Hannifin posted an average EPS of $6.18, beating the collective consensus view of $5.55. This performance yielded an average earnings surprise of 11.48%. Notably, Q4 represented a particularly strong quarter, with EPS of $6.15 beating the consensus target of $5.26.
Compared to other manufacturing stocks in the same field, PH stock is more attractive, trading at 3.61X sales. That’s a bit of a premium, though, compared to the prior year’s metric of 2.93X. Still, analysts see steady growth in the years ahead.
By fiscal 2025, sales could jump to $20.62 billion, while EPS could rise to $26.33. Last year, the company posted earnings of $21.55 on revenue of $19.07 billion.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.