4 Industrial Stocks Poised to Continue Their Winning Streak in 2025

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The Zacks Industrial Products sector faced significant headwinds in 2024, owing to persistent softness in the manufacturing sector, supply-chain disruptions and inflationary pressure. The rising cost of raw materials and shortages of semiconductor, electrical and electronic components heavily affected industrial goods production. The persistence of high inflation in the United States further intensified the problem by increasing operational expenses and reducing profit margins.

Per the latest report published by the Federal Reserve, production at U.S. factories declined 0.3% in October while manufacturing output fell 0.5%. Also, capacity utilization declined to 77.1% in the same month, which is 2.6% below its long-run average rate.

What Lies in Store for Industrial Stocks in 2025?

Activities in the manufacturing sector have not been impressive over the past several months. Per the Institute for Supply Management’s report, the Manufacturing PMI (Purchasing Manager’s Index) touched 48.4% in November, contracting for the eighth consecutive month. However, the sector has been showing signs of gradual improvement.

In November, the New Order Index recorded 50.4%, increasing 3.3 percentage points from the previous month’s level. While supply-chain disruptions persist, especially related to the availability of electronic components, the situation has improved, as evident from the latest ISM report’s Supplier Deliveries Index, which reflected faster deliveries in November.

The uptick in new orders, especially for electronic products and machinery, in conjunction with the improvement in the supply chain, is expected to bolster manufacturing activity in 2025. While the recent recovery in orders hold promise, a significant increase is not expected over the near term given the persistence of inflationary pressure.

4 Top Industrial Stocks for 2025

Despite the industry-wide challenges, certain industrial companies defied the odds and delivered impressive performances in 2024. These include Zebra Technologies Corporation ZBRA, RBC Bearings Incorporated RBC, Applied Industrial Technologies, Inc. AIT and Powell Industries, Inc. POWL.

These companies have favorable fundamentals, which are likely to continue to reap benefits for their investors in 2025. The stocks, having a market capitalization of more than $1 billion, either sport a Zacks Rank #1 (Strong Buy) or carry a Zacks Rank #2 (Buy). Revenue and earnings estimates also look encouraging. You can see the complete list of today’s Zacks #1 Rank stocks here.

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