The industrial sector’s prospects appear promising due to the increasing demand for goods and services, the shift to smart factories with advanced technologies like robotics and IoT, and government initiatives that boost domestic manufacturing and infrastructure investment.
Given the favorable outlook for the sector, investors could consider investing in high-quality industrial stocks like Littelfuse, Inc. (LFUS), Watts Water Technologies, Inc. (WTS), and Franklin Electric Co., Inc. (FELE), which are strategically positioned to benefit from the current manufacturing boom.
The industrial sector is experiencing a digital transformation in the era of Industry 4.0, leading to increased productivity and efficiency. The global Industry 4.0 market is projected to reach $482 billion by 2032, registering a CAGR of 20.7%.
Driven by the rapid adoption of industrial automation, the global industrial services market is projected to expand at a 6.5% CAGR from 2024 to 2030. As companies embrace these technologies, the demand for more advanced and reliable industrial services continues to rise.
Moreover, the U.S. government is driving industrial growth through the Chips Act and the Inflation Reduction Act. By offering financial incentives and encouraging public-private partnerships, these government policies are fostering an industrial resurgence, paving the way for advanced technologies and sustainable growth in the U.S.
Let’s assess why the three featured Industrial-Manufacturing stocks are worth investing in now.
Stock #3: Littelfuse, Inc. (LFUS)
LFUS designs, manufactures, and sells electronic components, modules, and subassemblies worldwide. The company operates through three segments: Electronics; Transportation; and Industrial.
On October 5, 2024, LFUS announced the launch of RCMP20 Residual Current Monitor Series for Mode 2 and Mode 3 EV charging stations. Featuring the largest current transformer (CT) aperture in the industry, the RCMP20 Series enhances Littelfuse’s growing portfolio of EV infrastructure solutions.
In the fiscal second quarter ended June 29, 2024, LFUS’s net sales amounted to $558 million. Its gross profit was $207.00 million. Moreover, its net income and adjusted EPS came in at $45.47 million and $1.97, respectively.
Street projects LFUS’ revenue and EPS to rise 4.1% and 17.9% year-over-year to $557.72 million and $2.08 in the fiscal fourth quarter ending December 2024. It has exceeded the EPS consensus estimate in each of the four previous quarters, which is impressive.
The stock has climbed 13.6% over the past year and soared 9.5% over the past six months to close the last trading session at $253.12.
LFUS’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B for Quality. It is ranked #12 out of 34 stocks in the B-rated Industrial-Manufacturing industry.
To access LFUS’s Growth, Value, Sentiment, Stability, and Momentum ratings, click here.
Stock #2: Watts Water Technologies, Inc. (WTS)
WTS operates globally through its flow management, HVAC, and water quality solutions. It operates through three segments, namely Americas; Europe; and Asia-Pacific, Middle East & Africa (APMEA).
On September 13, 2024, WTS paid a quarterly dividend of $0.43 per share. It pays an annual dividend of $1 per share, which translates to a yield of 0.98% on prevailing prices, higher than its four-year average yield of 90%.
During the fiscal second quarter that ended June 30, 2024, WTS’s total sales increased 12% year-over-year to $597 million with flat organic sales. Its reported operating margin was 18.7%, while the adjusted operating margin was 18.8%. Additionally, adjusted EPS was $2.46, up 5% year-over-year.
Analysts expect WTS’ revenue for the quarter ended September 30, 2024, to increase 7.4% year-over-year to $541.50 million. The company has an excellent earnings surprise history; it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past year, the stock has gained 21.2% to close the last trading session at $200.41. It soared 5.57% year-to-date.
WTS’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
WTS has a B grade for Quality. It is ranked #9 out of 34 stocks in the same industry.
Beyond what we have stated above, we also have given WTS grades for Growth, Value, Momentum, Sentiment and Stability. Get all the WTS’s ratings here.
Stock #1: Franklin Electric Co., Inc. (FELE)
FELE designs, manufactures, and distributes water and fuel pumping systems globally. The company operates through three segments Water Systems, Fueling Systems, and Distribution.
On August 15, FELE paid a quarterly cash dividend of $0.25 per share.
In the fiscal second quarter, which ended June 30, 2024, FELE’s gross profit increased 6% from the prior year-quarter to $199.80 million. The company posted a net income of $59.10 million, and its EPS came in at $1.28.
Street expects FELE’s revenue for the fiscal third quarter (ended September 2024) to increase 2.4% year-over-year to $551.08 million. Its EPS for the same quarter is projected to grow 2.8% from the prior year to $1.27.
Shares of FELE have gained 21.2% over the past year and 5.6% year-to-date to close the last trading session at $102.40.
FELE’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Stability and Quality. Within the same industry, it is ranked #7.
Click here to see FELE’s other ratings for Growth, Value, Momentum, and Sentiment.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
WTS shares were trading at $198.89 per share on Thursday afternoon, down $1.52 (-0.76%). Year-to-date, WTS has declined -3.94%, versus a 23.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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