The 3 Most Undervalued Industrial Stocks to Buy in September 2023
According to Morningstar, industrial stocks are affiliated with companies that manufacture machinery, handheld tools, industrial products, aerospace, defense and transportation. The best industrial stocks to buy are those that are heavily exposed to the energy revolution, U.S. economic growth, government infrastructure spending and the onshoring trend. The latter term refers to American companies’ recent tendency to relocate their factories to America. And with many farmers prospering tremendously amid very high food prices, buying the shares of farm equipment makers also makes a great deal of sense. The following greatly undervalued industrial stocks have a great deal of exposure to one or more of those trends.
Quanta Services (PWR)
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Quanta (NYSE:PWR) builds infrastructure, electrical power stations, facilities for renewable energy and natural gas transmission.
Consequently, the company is very well-positioned to benefit from the shift to electrified transportation. Quanta will therefore see an increased need in their services in the forms of energy transmission and additional power grids. Additionally, Quanta will be helped by the tremendous amount of money that will be spent on renewable energy facilities.
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Quanta has taken on two huge renewable energy products in SunZia Transmission and SunZia Wind. The company was selected to transmit wind power generated in New Mexico to power-hungry states in the Western U.S. Cumulatively, the two initiatives ” represent the largest clean energy infrastructure project in United States history,” Quanta reported.
Quanta will doubtlessly generate a great deal of revenue and profits from these projects and will probably be chosen to carry out many more like them.
Despite these powerful, positive catalysts, PWR stock only has a forward price-earnings ratio of 23.25 which is about average for the S&P 500. As a result, it’s definitely one of the most undervalued industrial stocks.
Manitowoc (MTW)
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Construction equipment provider, Manitowoc (NYSE:MTW), is well-positioned to benefit from strong U.S. economic growth.
Barron’s noticed that, in previous weeks, industrial stocks had retreated. The hypothesis was that, if the Fed stopped raising its rates, the industrial sector and the American economy could continue their expansion.
Barron’s also noted that undervalued industrial stocks can get a lift from the current, high level of infrastructure spending by the U.S. government. The American economy does indeed look set to continue growing, as retail sales expanded significantly again last month. The Atlanta Fed predicts that the U.S. economy will grow by a very impressive 5.8% this quarter. Meanwhile, most market observers now believe that the Fed is done or almost finished raising rates.
Barron’s named Caterpillar (NYSE:CAT) as one of the stocks that can benefit from these trends. Mantiwoc also sells construction equipment and equipment used to expand infrastructure. The company is also well-positioned to benefit from the current high oil prices due to its marketing oil exploration equipment. MTW has a very low forward price-earnings ratio of 9.8.
Deere (DE)
Source: Jim Lambert / Shutterstock.com
Deere (NYSE:DE) markets farming equipment. As a result, the company is benefiting from high food prices which is incentivizing farmers to harvest more crops.
Last quarter, Deere’s revenue jumped 12% versus the same period a year earlier. Its net income also soared an incredible 58% year-over-year to $2.98 billion.
“Reflected by our strong third-quarter results, Deere continues to benefit from favorable market conditions and an operating environment showing further improvement,” said CEO John C. May in a statement.
DE stock has a very low forward price-earnings ratio of 12.4.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.
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