Industrial stocks are a fundamental component of the economy, acting as the backbone for production, infrastructure, and technological innovation. Companies in this sector are responsible for manufacturing the machinery, equipment, and materials that drive economic expansion across various industries.
Given the industry’s robust prospects, you might consider investing in three fundamentally stable industrial stocks, AMETEK, Inc. (AME), Cummins Inc. (CMI), and Howmet Aerospace Inc. (HWM), that are poised for long-term growth and gains.
With massive infrastructure spending and investments in transportation, energy, and urban development projects, there is an increased demand for sustained economic development over the coming decades. As per a PwC report, the worldwide infrastructure is set to grow by more than $9 trillion in 2025, driven by emerging markets like China and other Asian countries.
Furthermore, innovation in automation, robotics, and digital manufacturing is further enhancing industrial firms. Many companies are integrating advanced technologies into their production processes, which improves efficiency, reduces costs, and drives productivity gains. This technology evolution has the largest impact on business outcomes relative to other smart manufacturing technologies, and gen AI or causal AI offers the largest ROI.
In conclusion, investors looking for long-term growth opportunities can explore industrial stocks as they continue to benefit from robust infrastructure investments and technological innovation. Also, the global industrial machinery market is anticipated to reach $1.30 trillion by 2032, growing at a CAGR of 7.5%.
With that in mind, let’s evaluate the fundamental aspects of the three Industrial - Machinery stocks mentioned above, starting with the third pick.
Stock #3: AMETEK, Inc. (AME)
AME is a global provider that manufactures and sells electronic instruments and electromechanical devices. The company operates through two segments: Electronic Instruments (EIG) and Electromechanical (EMG).
On February 4, AME announced the completion of its acquisition of Kern Microtechnik, a leading manufacturer of high-precision machining and optical inspection solutions. This acquisition fits AME’s Ultra Precision Technologies division and helps with geographic expansion.
In the fiscal fourth quarter that ended on December 31, 2024, AME’s net sales increased marginally year-over-year to $1.76 billion. Its operating income grew 5.4% from the year-ago value to $468.98 million. In addition, its net income came in at $387.26 million, and its adjusted EPS stood at $1.39, up 12.9% and 11.3% year-over-year, respectively.
According to the 2025 outlook, the company expects adjusted EPS to range from $7.02 to $7.18, an increase of 3% to 5% over the comparable basis for 2024.
Street expects AME’s EPS for the fiscal first quarter (ending March 2025) to increase 2.9% year-over-year to $1.69. Its revenue is expected to increase marginally year-over-year to $1.74 billion. Further, it topped the street EPS estimates in each of the trailing four quarters, which is promising.
Moreover, AME’s normalized net income has grown at CAGRs of 10.9% and 9.2% over the past three and five years, respectively. In addition, its total assets increased at 8.3% CAGR over the past five years.
Over the past six months, the stock has surged 13.7%, closing the last trading session at $183.54.
AME’s stance is apparent in its POWR Ratings. The stock has a B grade for Momentum, Sentiment, and Quality. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 78 stocks in the A-rated Industrial - Machinery industry, it is ranked #37. Click here to see the additional AME ratings (Growth, Value, and Stability).
Stock #2: Cummins Inc. (CMI)
CMI offers complementary business segments that design, manufacture, distribute, and service diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. The company operates through five segments: Engine; Distribution; Components; Power Systems; and Accelera.
On February 11, CMI announced the acquisition of assets of First Mode, a leader in retrofit hybrid solutions for mining and rail operations. Under the terms, CMI will acquire First Mode’s commercial portfolio, manufacturing, and technical teams in Australia, the United States, and Chile, along with the hybrid mining and rail product lines and the full IP portfolio.
This acquisition will allow CMI to elevate its product portfolio and accelerate its ability to provide effective and innovative decarbonization solutions.
On January 29, CMI and Liberty Energy Inc. (LBRT) announced together that they would deploy and develop the industry’s first natural gas variable speed, a large displacement engine, to power Liberty’s digiPrime hydraulic fracturing platform. This strategic partnership’s revolutionary technology will be deployed in the first half of 2025. This solution is CSA-compliant and is a major step in providing products that help customers reduce their carbon footprint.
During the fiscal year 2024 that ended on December 31, 2024, CMI’s net sales increased marginally year-over-year to $34.10 billion. The company’s gross margin came in at $8.44 billion, reflecting an increase of 2.3% from the prior year's period.
Its operating income grew 112.6% from the year-ago value to $3.75 billion. Moreover, its attributable net income came in at $3.95 billion and $28.37 per share, up 436.9% and 450.9% year-over-year, respectively. Also, CMI’s adjusted EBITDA rose 109.7% from the prior year’s value.
Analysts expect CMI’s revenue for the current year (ending December 2025) to grow marginally to $34.77 billion and its EPS to be $22.35. For the fiscal year 2025, its revenue and EPS are expected to grow by 7.9% and 19.8% from the prior year to $37.50 billion and $26.78, respectively.
Over the past three and five years, CMI’s EBIT grew at CAGRs of 19.9% and 8.8%, respectively, while its total assets grew at 9.9% CAGR over the past three years.
The stock has gained 43.5% over the past year and 26.6% over the past nine months to close the last trading session at $373.78.
CMI’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
CMI has a B grade for Stability, Sentiment, and Quality. It is ranked #21 out of 78 stocks in the same A-rated industry. Click here to see the additional ratings for CMI (Growth, Value, and Momentum).
Stock #1: Howmet Aerospace Inc. (HWM)
HWM is a provider of advanced engineered solutions for the aerospace and transportation industries internationally. The company operates through four segments: Engine Products; Fastening Systems; Engineered Structures; and Forged Wheels.
HWM’s net sales for the fiscal first quarter that ended December 31, 2024, increased 9.2% year-over-year to $1.89 billion, while its adjusted operating income grew 36.5% from the year-ago value to $445 million. The company’s adjusted EBITDA rose 26.8% from the prior-year quarter to $530 million.
Additionally, its net income excluding special items (non-GAAP) came in at $303 million, indicating a 39% growth from the prior-year quarter period, and its adjusted EPS excluding special items (non-GAAP) was $0.74 per share, up 39.6% year-over-year.
The consensus revenue estimate of $1.91 billion for the fiscal first quarter (ending March 2025) represents a 4.8% increase year-over-year. The consensus EPS estimate of $0.76 for the same quarter indicates a 32.9% improvement year-over-year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
HWM’s earnings from continuing operations have grown at CAGRs of 55.4% and 36.7% over the past three and five years, respectively. Likewise, the company’s levered FCF has increased at a CAGR of 73.2% over the past five years.
HWM shares have surged 110.5% over the past year and 65% over the past nine months to close the last trading session at $133.42.
HWM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has a B grade for Momentum, Sentiment, and Quality. Within the same Industrial - Machinery industry, it is ranked #20. Click here to see HWM’s ratings for Growth, Value, and Stability.
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HWM shares were unchanged in premarket trading Monday. Year-to-date, HWM has gained 22.08%, versus a 4.03% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
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