Top Industrial Stocks to Buy for an Expansion

Industry’s Return To The Economic Center

For many years, an idea rose in Western countries that industrial capacity was not the most important aspect of a developed economy, with design and services forming the backbone of the economy instead.

As a result, a lot of industries were moved to cheaper locations like China. Today, it appears clearly that deindustrialization came with a series of unintended consequences:

• Strategic vulnerabilities in the case of diplomatic relations degrading.
• Loss of critical skills and reduced innovation.
• Damage to social and economic conditions of formerly industrialized regions, forming “rust belts”.
• Growing trade deficits.

For all these reasons, industries like manufacturing, construction, transportation, aerospace, machinery, and engineering services are back to being the center of attention of politicians and investors.

These firms build and maintain the infrastructure, logistics networks, and production equipment that enable economic expansion.

Why Industrial Stocks Outperform During Economic Expansions

When the economy grows, demand for industrial goods and services rises, as governments fund infrastructure projects, companies increase capital spending, and consumers drive higher production volumes.

That’s why industrial stocks are often seen as “cyclical” investments — they tend to outperform during periods of economic recovery and expansion when factories are busy, energy demand is strong, and supply chains are scaling up.

Top Industrial Stocks at a Glance

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Best 10 Industrial Sector Stocks for Economic Growth

1. Caterpillar Inc.

No matter what industrial activity a company does, it more often than not involves moving a massive volume of goods from one point to another. It also likely relies on a large amount of raw material inputs, which need to first be mined. The same can be said for building new factories.

All of these activities require large equipment like trucks, excavators, bulldozers, as well as massive generators, marine engines, and locomotives, which are the specialty of Caterpillar, with more than 4 million pieces of equipment in service all over the world.

The company roughly does half of its sales in the US (47%) and half in the rest of the world (53%). The two largest activity segments are construction and energy & transportation, which generated more than 3/4^th of the company’s revenues in 2024, with the resource industry (mining, logging, etc) the other large segment.

Fuente: Caterpillar

Caterpillar is a global leader that benefits from all sorts of industrial activity, but especially from capital expenditure for the opening of new factories, buildings, and mines.

It is also a company with a strong focus on sustainable growth, financial stability, and returns to shareholders, with 31 consecutive years of rising dividends and regular share repurchases, making it a good option for investors looking for income as well as growth.

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2. Dover Corporation

Many industrial companies thrive from producing excellent machinery that is mostly unknown or invisible to the general public, with the brand only known to professionals. This is the case with Dover, which produces a wide array of industrial tools.

The company is organized around 5 segments:

Engineered Products: maybe the most diverse segment of the company, it includes many brands for activities :

• SaaS 3D visualization solutions for manufacturers (CDS visual).
• Vehicle lifts for car maintenance in garages (Vehicle Service Group).
• Microwave antenna and electronics (MPG).
• Soldering tools.
• Crane and lifts (TWG)

Clean Energy & Fueling: liquid fuel and gas dispensers for fuel stations.

Imaging & Identification: supply chain & industrial marking, coding, packaging systems, as well as textile printing.

Pumps & Process Solutions:

• Liquid cooling systems.
• Liquid transfer for biotech labs and pharmaceutical factories.
• Remote monitoring of production, transportation, and industrial use of natural gas, hydrogen, and carbon capture.
• Gear pumps, pelletizing systems, pulverizing, and filtration technologies

Climate & Sustainable Technologies:

• Commercial fridges for supermarkets.
• Heating and cooling systems use the waste heat from refrigeration for heating.
• Brazed plate heat exchangers for industrial applications.

Each of the segments is making up roughly 1/5^th of the company’s activity, providing a strong diversification of its revenues. Dover businesses generally occupy the Top 3 supply positions (globally) within the relevant niches.

Fuente: Dover Corporation

A large part of the company’s income is from recurring revenues through the sale of parts, consumables, and services, giving it predictable income (59% of total revenues) from the installed equipment base.

Overall, Dover expands through a mix of acquisitions and a healthy organic growth of revenues of 5% CAGR, benefiting from underlying strong growth trends, including sustainability, automation, and reindustrialization.

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3. CSX Corp

The industrial capacity is tightly linked to its logistical network, as most industrial goods need heavy raw materials and require moving large volumes of products at the lowest possible cost.

Internationally, the cheapest freight solution is usually by sea. On land, heavy industry needs solid railroad transportation.

CSX is a major railroad operator on the American East Coast, including several important resources and manufacturing centers, and the most active region when it comes to recent industrial investments, with over 250 new customer facilities or expansions since 2023.

It is essential to the movement of raw materials (food, wood, coal, minerals), basic industrial products (fertilizers, metals, chemicals), as well as finished products (equipment, cars).

22% of its revenues also come from “intermodal”, connecting train transportation to truck deliveries for e-commerce purchases, consumer goods, imports/exports, etc.

Fuente: CSX

As railroads are essential industrial infrastructure, but also very difficult to build new ones, CSX is in a good position to benefit greatly from the US reindustrialization efforts.

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4. IDEX Corporation

IDEX is a manufacturer of “of highly engineered components” active in 3 main segments:

• Fluid & Metering Technologies (FMT): pumps, valves, flow meters, injectors, and flow monitoring, for the chemical, general industrial, water & wastewater, agriculture, food, and energy industries.
• Health & Science Technologies (HST): Precision fluidics, rotary pumps, displacement pumps, roll compaction, and drying systems used in beverage, food processing, pharmaceutical, and cosmetics.
• Fire & Safety + Diversified (FSDP):
  • Truck-mounted and portable fire pumps, stainless steel valves, foam and compressed air foam systems, rescue tools, and water distribution for fire control and fire responders.
  • High-heat-resistant fastening solutions for critical automotive components.
  • Equipment for dispensing, metering, and mixing colorants and paints.

Fire safety is the smallest of the three segments, but none is dominating the company’s activity, providing some diversification of revenues, while keeping the “pumping and moving fluids” core engineering expertise at the center of the company’s activity.

Half of the sales are made in the USA, with Europe and the rest of the world each making 1/4^th of revenues. In total, the company employed 9,000+ employees and generated $3.3B of revenues in 2024.

The company’s current position was in large part the result of serial acquisitions, with more than a dozen companies acquired between 2020 and 2024 for a total of $3B to expand the client pool and technology base.

Fuente: IDEX

By concentrating on a defined technology set with a very wide range of applications, IDEX has been building a durable competitive advantage that should profit from the expansion of production in the USA of biotech, food, & cosmetics manufacturing, and any water-consuming industries.

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5. Illinois Tool Works

ITW is a diversified industrial company producing a wide range of items:

• Automotive parts like brakes, refueling, fasteners, steering, suspensions, etc.
• Fastening, anchoring, and reinforcement construction tools like nail guns, concrete anchors, etc.
• Cooking and refrigeration equipment for restaurants and food product factories.
• Test and measurement tools for electronic components.
• Welding tools.
• “Polymers and fluids” like sealants, coatings, lubricants, additives, adhesives, cleaners, etc.
• “Specialty products” include resealable zippers and six-pack rings for consumer products, packaging for the medical device industry, and aircraft ground support equipment.

The company’s revenues, $15.9B in 2024, are spread between many different industries, reducing its exposure to the fluctuations in activity of a given industry.

Fuente: ITW

Since 2012, the company has gone through a deep transformation to optimize its profit margin and return on invested capital, with operating margin consistently 50-100% larger than the average of its peers.

Fuente: ITW

A key element was reorganizing the R&D around customers more than technology.

Our innovation efforts are division-led and are centered around customer needs, not a corporate research and design center.

This approach, built on decades of innovation experience, delivers better outcomes for our customers and higher growth and returns on investment for ITW.

Overall, ITW’s business is tightly correlated to overall industrial economic activity and the economy as a whole, as it benefits from more cars being sold and more buildings being erected.

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6. GE Aerospace

GE Aerospace, the airplane turbine segment of the now split-up conglomerate, is the world’s largest producer of airplane engines. At any given time, up to 950,000 people are flying on GE-powered aircraft, with 3.4 billion passengers flying with GE technology per year. These impressive numbers are reached because no less than 3 out of 4 commercial flights are powered by GE Aerospace’s fleet of 44,000 engines in service.

The company is also a producer of military airplane engines, giving it a scale and reach superior to any of its competitors. GE Aerospace keeps innovating with better fuel efficiency, and its future “RISE” engines are expected in the 2030s.

Fuente: GE Aeroespacial

Overall, GE Aerospace is going to stay one of the most impressive industrial companies in the USA, leading globally both in technology and sales.

(You can also read more about GE Aerospace in our investment report dedicated  to the company.)

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7. Deere & Company

This publicly traded company is known for its iconic green and yellow agricultural machinery. As such, it is a key industrial manufacturer supporting wood and food production globally. Its largest market is the US, followed by Canada and Western Europe.

The agriculture market (combine, large tractor) is only a part of the company’s activities, with more than half of its revenues coming from machines used in forestry or “small agriculture and turf”, like sit-on mowers, small tractors used for moving hay or materials, snow plows, etc.

It is also a leader in the most advanced farming pieces of machinery, deploying technologies such as AI, IoT, robots, machine learning, big data, etc., to make data-driven decisions.

Deere is also partnering with startups like Blue River Technology, using machine vision to identify every plant in the field.

So, it is likely that autonomous tractors/robots and machine vision will be John Deere’s future, smoothly integrating these technologies with satellite imagery and other AI-driven solutions.

(You can also read more about John Deere in our investment report dedicated to the company.)

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8. Argan

Industrial production is generally a very energy-intensive activity, requiring a lot of power and/or heat. They might also require the building of specialized infrastructure able to handle specific conditions like high corrosion, high heat, etc.

This is where Argan specializes, offering power industry services, industrial construction, as well as a smaller activity in telecommunication infrastructures. By far, the power industry services represent the largest segment of the company, making up 83% of total revenues.

As electricity progressively replaces fossil fuels, industrial processes formerly reliant on coal or oil increasingly need a reliable electricity supply, something that the power grid often struggles to provide, especially for large consumers like heavy industries and data centers.

Water treatment for a growing population and reindustrialization is also very energy-consuming.

So companies like Argan, able to bring online large power generation capacity, are seeing a growing backlog of orders, as grid operators scramble to add more energy production.

Fuente: Argan

Among the incoming projects of the company can be mentioned a 950MW natural gas power plant in Ohio, another one of 1,200 MW capacity in Texas, and a 1,035 MW solar project combined in Illinois and Ireland.

Contrary to many other heavy industries, Argan can ask for prepayment before starting a project, meaning that more work does not increase the company’s capital expenditures. Combined with no debt, this business model makes the company remarkably safe for its shareholders.

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9. Paccar

While ships and trains are responsible for the movement of bulk commodities and heavy equipment, most of the actual delivery of goods requires trucks, with 72% of US freight moved by trucks.

Paccar started as a railway and logging equipment company, and is today a truck manufacturer, having been present in this market since 1945.

It produces light-, medium-, and heavy-duty trucks under the Kenworth, Peterbilt, and DAF nameplates, selling through an extensive dealer network of 2,200 locations.

It has manufactured 1.7 million trucks between 2015 and 2024, with most sales to the US and Europe. The company produces its own engines, drivetrains, and axles, and 20% of revenues come from the sales of parts.

Fuente: Paccar

The group includes PACCAR Leasing, a major full-service truck leasing company in North America, with a fleet of 38,000 vehicles.

The whole PACCAR Financial Services provides finance, lease, and insurance services in 24 countries, including a portfolio of more than 180,000 trucks and trailers and total assets in excess of $13 billion.

It generated $33.7B of revenues in 2024, and has paid a dividend continuously ever since 1941, with dividends overall growing 7% CAGR between 2005-2024.

Paccar is moving into electrifying its truck offer, with multiple models for each of the brands, using LFP battery technology, as well as dedicated charging stations ranging from 20kW to 350 kW capacity, developed in collaboration with Faith Technologies and Schneider Electric.

The company will be building a battery factory (30% ownership of the joint venture) in partnership with Amplify and Daimler Trucks; production should start in 2027.

Fuente: Paccar

As a leader in truck production and getting ready to tackle electrification, Paccar is another US industrial leader ready to benefit from increased industrial production and physical economic activity.

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10. DuPont

DuPont es una gran empresa química con muchos productos químicos de marca importantes, como Kevlar, Styrofoam, Nomex (protección contra incendios), Great Stuff (adhesivo para la construcción), etc. Su avanzada investigación en polímeros y sus marcas de materiales de protección podrían posicionarla para beneficiarse de las tecnologías de metamateriales de doble red.

DuPont is an ancient corporation with a complex history of acquisitions, and, more recently, a series of spin-offs.

Fuente: DuPont

These spinoffs have separated from DuPont the departments of nutrition and bioscience, partially sold to Corteva Biosciences (CTVA -0.95%), titanium products to form the Chemours Company (CC -1.05%), and mobility.

También se separará de su negocio de productos químicos electrónicos en noviembre de 2025 to form Qnitypero mantiene el segmento del agua (membranas y filtros para la purificación y desalinización del agua), contrariamente a los planes anteriores.

Fuente: DuPont

Esto dejará a DuPont como una empresa mucho más centrada, con una actividad principal en polímeros avanzados para equipos de purificación y protección del agua, así como materiales avanzados para la industria aeroespacial, la sanidad y los vehículos eléctricos.

Fuente: DuPont

DuPont es una empresa verdaderamente internacional, con una gran demanda de especialidades químicas para la purificación del agua y la fabricación industrial.

Los sectores a los que sirven los productos químicos de DuPont son también muy variados: construcción, depuración de aguas, industria electrónica, automoción, aeroespacial, sanidad, energía verde y producción industrial.

The strong presence of DuPont in advanced chemicals makes it a key partner for many industries needing ultra-clean water (like semiconductor manufacturers) or special products for production in biotech, aerospace, EVs, etc.

As new technologies are growing, as well as water consumption, so is the demand for the advanced chemicals produced by DuPont.

(You can also read more about DuPont in our investment report dedicated  to the company.)

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