Industrials - Getting Much More Interesting

This sector is getting much more interesting. One year ago, most of these stocks were near their highs. Many of these companies have had a bumpy last 9 months, as the 2022 and 2023 pandemic recovery faded. Now that a recession still looms in 2025, timing will be tricky.

Any of the top 20 stocks on this list might be the best idea. I wrote about Chart - GLTS a week ago in a post called “Hydrogen Flavored ….”, now lets talk about Titan and Middleby.

Titan International - TWI - $7 - is a very average company, selling at a very below average valuation (.8x book, .5x EV/sales). New management has cleaned up the company since visionary, but slightly crazy, Morry Taylor stepped aside. Taylor ran for President in 1996, and wrote a book called “Kill All the Lawyers”. TWI has decent market share in agriculture and lawn mower tires. Right now they are not covered by a single analyst. Nobody wants to go to Iowa City? I have met these guys a few times at the Three Part conference, and I was impressed. The Carlstar acquisition will take some time to digest, but the balance sheet is ok.

Middleby - MIDD - $121 - is great company selling at a very average price (12x earnings, 2x EV/sales). Just take a minute to page through their June investor presentation. They have done everything right for many years. I wish they had less exposure to residential remodel and construction, but the foodservice business is dominant. The smartest hedge fund I follow, Select Equity, owns 10%, and is buying more. Do I worry about the next quarter? I do, but in the long-term who cares?

Below are my next 20+ industrial stock ideas in order:

1. CH Robinson - CHRW - $87 - well managed truck broker, I sat with XPO guys and had this whole complex industry explained to me, there is plenty of consolidation still to come.

2. CNH Industrials NV - $10 - Euro-based ag equipment maker, I need more courage

3. Driven Brands - DRVN - $13 - franchisor of car washes and quick oil changes, not really an industrial. I hate the car wash business, but the rest is solid

4. GXO Logistics - GXO - $49 - warehouse spinoff of XPO

5. Jacobs Solutions - J - $138 - large builder of infrastructure, not sure about the new CFO, but a great way to play energy transition

6. Lindsay Mfg. - LNN - $114 - irrigation equipment maker with issues in Brazil, my other ag ideas are better

7. Astec Ind. - ASTE - $29 - road building equipment, infrastructure play

8. Energy Recovery - ERII - $13 - great tech for desalinization, but not sure about commercial refrigeration yet

9. Douglas Dynamics - PLOW - $22- commercial snow plows, warm winter last year

10. Alaska Air - ALK - $40 - young fleet, good balance sheet

11. John Bean Technologies - JBT - $91 - food equipment, smart guys

12. Trinity Industries - TRN - $29 - love the railcars, hate the leasing business

13. Columbus McKinnon - CMCO - $34 - winches, no not wenches, well run company

14. Matthews International - MATW - $24 - gravestones with an EV kicker

15. Heidrick & Struggles - HSII - $32 - well run top executive recruiter

16. Matrix Services - MTRX - $9 - we need to repair our refineries

17. Wabash National - WBC - $22 - high quality truck trailers

18. Hillenbrand - HI - $39 - they spun out the casket business

19. Liquidity Services - LQDT - $20 - unique reseller of capital equipment

20. Ameresco - AMRC - $27 - renewable energy builder

21. Great Lakes Dredge & Dock - GLDD - $9 - infrastructure

22. Gorman-Rupp - GRC - $37 - Big water valves, small cap gem

23. MasterBrand - MBC - $14 - cabinet maker, spinoff, could be cheaper

24. Vestas Wind - VWDRY - $9 - Euro windmill maker, tricky, Biden stock

25. NuScale Power - SMR - $12 - Small modular reactors, near a high

26. Quest Resource - QRHC - $9 - Picking up commercial/industrial waste. I have met these guys and remain on the fence. There are accounting issues to understand.

27. Norfolk Southern - NSC - $216 - Reasonable restructuring is underway

28. Xylem - XYL - $133 - Water is cool, but we need the stock under $100

29. Albany Inter. - AIN - $83 - How much will the paper companies spend?

30. Masco - MAS - $65 - I am still cautious on building related stocks, but these guys are well run

31. Kirby - KEX - $121 - The search is on to find the next Kirby, this one has run too much