10 Best Industrial Stocks to Watch in 2024
Industrials are the backbone of a strong economy. What exactly industrial stocks are is explained in this article. Furthermore, the advantages and disadvantages of these stocks are clarified and a list of some of the best industrial stocks to watch is provided.
Table of Contents
What are Industrial Stocks?
The industrial goods sector is a critical and broad sector of the economy. Companies in the industrial goods sector often provide capital goods, such as equipment and machinery. These companies operate in sectors such as:
- Aerospace
- Defence
- Air freight
- Logistic
- Building
- Commerce
- Transportation
- Construction
- Waste management
- Manufacturing
Some of the largest companies in the world can be found in this sector and industrial stocks represent shares in these companies.
The Dow Jones 30 industrial average (DJIA) has a strong historical connection to industrial stocks. These days companies in the DJIA also include Apple, Microsoft, and Coca-Cola, which are not industrial companies.
10 Best Industrial Stocks to Watch
Since the term ‘best’ is inherently subjective, the following list of industrial stocks can be used by investors as a starting point to conduct their own research. The following list shows the ten largest stocks in the Dow Jones Industrial Average (DJIA) 30 index.
- Microsoft - World's leading producer of software, hardware, and cloud computing services.
- Apple - Technology company that develops and sells hardware and software, it’s also the most valuable brand worldwide.
- Amazon - Market leader in internet trade.
- Visa - One of the two major payment card companies worldwide.
- JPMorgan Chase - Global financial services firm.
- Walmart - Global US retail group.
- United Health - Leading health and well-being company.
- Procter & Gamble - Multinational consumer goods corporation.
- Johnson & Johnson - American pharmaceutical and consumer goods company.
- Home Depot - Prominent retailer; home improvement chain.
Microsoft
The story of Microsoft starts with two boyhood friends from Seattle. In 1975 Bill Gates and Paul G. Allen started Microsoft Corporation. The company soon evolved into a multinational technology company and has been a key player in the computer industry ever since.
The company has a diverse and extensive range of technological offerings, both products and services. Examples include personal computing and entertainment, enterprise cloud computing, artificial intelligence, cloud-based computing solutions, online advertising, consulting, operating systems and gaming consoles.
Currently, Microsoft is the world's most valuable company with a market cap of $3.211 trillion.
Apple
In 1976 Steve Jobs, Steve Wozniak, and Ronald Wayne founded Apple Computer Company. To finance their first product, the Apple I, Jobs sold his Volkswagen Bus and Wozniak sold his HP-65 calculator.
These days, Apple continues to shape the future of technology. The company is known as a pioneering technology company with a strong emphasis on user experience. It offers an innovative range of consumer electronics like the iPad and iMac, as well as software and digital services.
Currently, Apple is the world's second most valuable company, with a market cap of $2.951 trillion.
Amazon
In 1994 Jeff Bezos founded Amazon in his garage. He started the company as an online marketplace for books, because of their universal appeal.
Nowadays, Amazon has expanded into an online retailer with a wide range of products. Next to this, the company has an integrated sales platform for private individuals and companies, and it developed Amazon Kindle, the Echo speech recognition system and much more.
Currently, Amazon has a market cap of $1.923 Trillion.
Visa
Visa’s journey began in 1958 in the U.S. and expanded internationally in 1974. The VISA brand is a recursive acronym. It stands for Visa International Service Association.
Visa is a multinational payment card services corporation. The corporation facilitates electronic funds transfers worldwide, with their credit cards, debit cards and prepaid cards. They also offer various security measures for fraud prevention and security and invest in new technologies to enhance digital payment.
Currently, Visa has a market cap of $565.99 Billion.
JPMorgan Chase
J. P. Morgan founded J.P. Morgan & Co. as well as the House of Morgan. These two firms merged in 2000, which resulted in the diversified holding entity that JPMorgan Chase & Co. is these days.
The firm is a powerhouse in the global financial services industry and is known for its extensive range of financial services, technological innovation, and strong market presence.
Currently, JPMorgan Chase has a market cap of $571.43 Billion.
Advantages and Disadvantages of Industrial Stocks
The companies in the industrial goods sector are directly impacted by changes in the economy, trade wars and geopolitical tensions. As a result, industrial stocks are highly cyclical.
Stages of the growth cycle
The major stages of the growth cycle are:
- Accelerating growth
- Decelerating growth
- Accelerating decline
- Decelerating decline
Companies in the accelerating growth and decelerating decline phases have the best performance and are given higher multiples. Investors can do well with industrial stocks when they take this growth cycle into account and pay attention to the industry trends.
The advantages and disadvantages of industrial stocks are mostly related to their cyclical nature.
Advantages of Industrial Stocks
- Historically industrial stocks have performed well, though this is no guarantee for future returns
- Middle of the pack in terms of risk
- Easily identifiable stocks
- Helps you predict the stock performance as the process works in a cyclical format
- Subsectors are (relatively) uncorrelated, so there is usually at least one area of growth in the industrial goods sector
Disadvantages of Industrial Stocks
- Sensitive to economic cycles
- Influenced by trade wars and geopolitical tensions
- High risk when the production turns down during high demand
- Uncertain Profits
How to Invest in Industrial Stocks
With Admiral Markets, you can trade and invest in thousands of stocks and ETFs. You can learn more about trading and investing commissions on the Admiral Markets Contract Specification page. Search for global stocks and ETFs from the MT5 web platform and invest in four steps:
- Open an account with Admiral Markets.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Conclusion
Industrial stocks can be interesting to investors depending on where the economy is within the economic cycle. However, it can be difficult to determine this. Exercising proper risk management and diversifying into other types of stocks can help to minimise drawdowns in a portfolio but not eliminate them.
Continue Reading:
- Best Shares to Buy
- Best Monthly Dividend Stocks
- Best Stocks for Long-Term Growth
- 6 Short Term Investments
- How to Trade the US Stock Market
- The CFD Trading Guide
FAQs on Industrial Stocks
How many stocks in the Dow Jones Industrial Average?
Since 1928 the DJIA reflects the performance of 30 stocks. Historically these companies belonged only to the industrial sector, but these days all kinds of companies are included.
Where to invest in industrial stocks?
It is possible to invest in individual industrial goods stocks or look to mutual funds and exchange-traded funds (ETFs). Investors can invest in industrial stocks or ETFs through their own broker or bank.
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