Top Industrial Stocks for September 2021

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The industrial sector includes companies that produce machinery, equipment, and supplies that are used in construction and manufacturing, as well as those that provide related services. These companies are closely tied to the economy, and their business volume often falls sharply during recessions, though each industrial subsector often performs differently. Well-known companies include Lockheed Martin Corp. (LMT), Honeywell International Inc. (HON), and 3M Co. (MMM). The industrial sector also includes companies that provide air transportation services such as United Airlines Holdings Inc. (UAL).

Industrial stocks, represented by the Industrial Select Sector SPDR ETF (XLI), have outperformed the broader market, providing investors with a total return of 37.3% compared to the Russell 1000’s total return of 34.5% over the past 12 months. These market performance numbers and all statistics in the tables below are as of Aug. 23, 2021.

Here are the top 3 industrial stocks with the best value, the fastest growth, and the most momentum.

These are the industrial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Industrial Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Louisiana-Pacific Corp. (LPX) 59.36 5.7 5.0
Seaboard Corp. (SEB) 4,030.91 4.7 6.1
Builders FirstSource Inc. (BLDR) 50.17 10.4 9.8

Source: YCharts

  • Louisiana-Pacific Corp.: Louisiana-Pacific Corp. makes building materials and engineered wood products. The company provides oriented strand board sheathing, siding and trim, i-joists, laminated veneer lumber, and similar products. It has operations in the U.S. Canada, Chile, and Brazil. On July 30, the company announced a dividend of $0.18 per common share, payable Sep. 1 to shareholders of record as of Aug. 10, 2021.
  • Seaboard Corp.: Seaboard is an international agribusiness and transportation company that mostly produces and processes domestic pork and ships cargo. The company also produces sugar, merchandises commodities, mills flour and feed, and generates electric power overseas.
  • Builders FirstSource Inc.: Builders FirstSource makes and distributes building products, and provides integrated services to professional homebuilders. It’s one of the largest suppliers in the building industry. The company closed its acquisition on Aug. 17 of WTS Paradigm LLC, a software solutions and services provider for the building products industry. Builders FirstSource says that WTS Paradigm will operate as an independent business and will enhance the parent’s digital platform capabilities. Terms of the acquisition were not disclosed in the press release.

These are the top industrial stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Industrial Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Louisiana-Pacific Corp. (LPX) 59.36 5.7 1,590 141.8
Builders FirstSource Inc. (BLDR) 50.17 10.4 256.7 186.6
Eaton Corp. PLC (ETN) 168.84 67.3 869.2 35.2

Source: YCharts

  • Louisiana-Pacific Corp.: See company description above.
  • Builders FirstSource Inc.: See company description above.
  • Eaton Corp. PLC: Eaton Corp. is an Irish-domiciled, U.S. manufacturer of engineered products for industrial, construction, commercial, aerospace, and related industries. The company sells products including electrical power distribution and control equipment, hydraulic products and fluid connectors, and engine components.

These are the industrial stocks that had the highest total return over the last 12 months.

Industrial Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Axon Enterprise Inc. (AXON) 186.73 12.3 126.0
Generac Holdings Inc. (GNRC) 415.03 26.2 122.3
Advanced Drainage Systems Inc. (WMS) 116.77 8.2 105.3
Russell 1000 N/A N/A 34.5
Industrial Select Sector SPDR ETF (XLI) N/A N/A 37.3

Source: YCharts

  • Axon Enterprise Inc.: Axon Enterprise designs and builds security systems. The company provides law enforcement, military, and self defense solutions. Among its most popular products is the Taser. The company reported widening net losses while net sales climbed by 54.9% YOY. Axon attributed revenue growth to city, county, and state highway patrol demand for our TASER and body camera bundles in the U.S., and strong growth in Latin America and Asia Pacific.
  • Generac Holdings Inc.: Generac designs and manufactures power generation equipment and other engine powered products, including generators for commercial, residential, mobile, and industrial use. In response to strong sales growth, Generac in August announced plans to expand its corporate operations by purchasing a building to house a customer contact center with roughly 300 employees. The center will be in Pewaukee, Wisconsin. In 2021, the company has also expanded with new operations in South Carolina, Colorado, and Massachusetts.
  • Advanced Drainage Systems Inc.: Advanced Drainage Systems makes water drainage supplies and structures including pipe fitting, leaching chambers, basins, grates, and grease interceptors.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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