Five Industrial Stocks to Keep on Your Radar Screen
These firms are less cyclical than you might think.
When presented with the opportunity to invest in an industrial firm, many investors think of the dreaded "cycle" and run screaming for the door. Well, maybe their reaction isn't that dramatic, but the cyclicality that plagues a large swath of industrial companies is often enough of a concern to keep investors from considering most industrial firms for long-term investment. It shouldn't be.
Sure, some investors are able to profit from cyclicality by buying when the cycle is at a trough and selling when the cycle peaks, without regard to firm quality. That approach requires some luck, though, given the market-timing necessary to predict an inherently unpredictable cycle, and most investors are less successful at it than they'd lead you to believe. As long-term investors, we tend to shy away from that strategy, since it gets away from the idea of buying a piece of a business and moves closer to gambling. We think there is a better way to invest in industrials.
Peter Smith does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.