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Industrial stock trading is a middle-of-the-road type investment. Growth traders tend to ignore them and position investors often use these stocks as core investments. However, industrial stocks can make a solid addition to almost any investor’s portfolio.
Industrial stocks generally have more growth potential than defensive stocks and less risk than growth stocks. However, industrial stock investors are not immune to risks. You can reduce the risks by trading among the top industrial stocks. Here is a list of 5 top industrial stocks.
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Overview: Industry Stocks
Technology and innovation are constantly changing the world around us and the way we do things. At the same time, we still build and travel by proven means — with heavy machinery and transport goods by air or ground. For this reason, industrial stocks have the reputation of being reasonably predictable and reliable. The companies in this sector are in industries such as manufacturing, transportation, construction and raw materials.
Most industrial companies are cyclical — they rely on the economy for success. Cyclical stock prices follow the economic cycle, better known as the business cycle. Cyclical revenue volume goes up during high business cycles and levels off during low cycles. In contrast, non-cyclical revenue volume stays fairly constant. An example of a noncyclical company is the maker of Heinz Ketchup.
Best Online Brokers for Industrials Stock
All investments have risks. Full-service online brokers can provide the material and tools you need to make more informed industrial stock trades. Take a look at these top online brokers.
Intermediate Traders and Investors
Features to Look For in Industrial Stock
- Earnings per share: An industrial stock’s earning per share (EPS) reveals how well the business functions financially and operationally. This ratio defines the amount of money owed to stockholders after subtracting all expenses and taxes. You can calculate a company’s EPS by subtracting the preferred dividend from the net income. Then, you divide the remainder by the number of shares outstanding. A company’s website normally has a link to its annual EPS in the 4th quarter income report.
- Consistency: An industrial stock should be relatively stable. The company’s revenue volume should follow the S&P 500 very closely. Its net income history can give you an indication of the firm’s consistency. Plus, an increase in operating profits is a sign of sound management.
- Diversity: Industrial companies usually have 4 to 5 income streams from various submarkets within their field. For instance, Honeywell generates revenue from aerospace, building technology, performance materials and safety.
Deciding on Your Industrial Stock Choices
It takes a great deal of adaptability and fortitude to be a leader in the industrial industry. Year after year, these 5 industrial companies have used their core competencies to continue to be leaders of the pack. If you’re looking for an industrial stock that consistently tracks the market, these industrial stocks are good examples.
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