Best industrial stocks

Looking for the best industrial stocks to invest in? Find out some of the strongest contenders, plus the benefits and drawbacks of investing in heavy-duty industrial shares.

Best industrials stocks See top stocks
How to buy industrial stocks Step-by-step instructions

Industrial stocks are the answer for everyone tired of hearing about cloud services and intangible software from firms that have never made a profit. Industrial companies have their feet firmly planted in the ground.

Put your hard hats on, because the value here is not in bytes and data, but in concrete, steel, and the relentless hum of machinery crafting the physical world we live in. Below, we highlight some top-notch industrial stocks that are the talk of the market and may be worth checking out for your portfolio.

What are the best industrial stocks?

Finding the best industrial stocks can be as complicated as keeping your eye on a factory production line as cogs, gears and conveyor belts churn out thousands of gizmos a minute. We’re going to help simplify things by powering down all the background noise.

Below, we’ve narrowed things down to the top 10 holdings in the MSCI US Investable Market Industrials 25/50 Index. This is a benchmark of large-, mid-, and small-cap US stocks in the industrials sector, as classified under the Global Industry Classification Standard (GICS).

IconStock1 year performance (February 2024)5 year performance (February 2024)Link to invest
Uber Technologies logoUber Technologies (UBER)103.51%65.96%Invest with XTBCapital at risk
General Electric logoGeneral Electric (HON)67.23%124.87%Invest with XTBCapital at risk
Catterpillar logoCaterpillar (CAT)27.83%149.92%Invest with XTBCapital at risk
Union Pacific logoUnion Pacific (UNP)18.03%52.51%Invest with XTBCapital at risk
Boeing logoBoeing (BA)-0.087%-48.97%Invest with XTBCapital at risk
Honeywell International logoHoneywell International (HON)-5.41%29.88%Invest with XTBCapital at risk
RTX logoRTX (RTX)-5.53%20.10%Invest with XTBCapital at risk
Deere & Co logoDeere & Co. (DE)-5.90%137.19%Invest with XTBCapital at risk
Lockheed Martin logoLockheed Martin (LMT)-10.10%39.87%Invest with XTBCapital at risk
United Parcel Service logoUnited Parcel Service Class B (UPS)-26.32%28.66%Invest with XTBCapital at risk

What are industrial stocks?

Industrial stocks represent businesses that deal with the creation, production, and distribution of goods.

These companies are involved in everything from constructing skyscrapers and manufacturing cars to producing energy and developing essential infrastructure.
Types of industrial stocks

Types of industrial stocks

The industrial sector is broad and encompasses a variety of companies that produce goods and services used in construction, manufacturing and infrastructure. Here’s a look at the main categories:

  • Heavy machinery and equipment. Specialising in the manufacturing and servicing of heavy machinery used in various sectors like construction, agriculture, and mining. Notable firms include Caterpillar and Deere & Co., known worldwide for their robust machinery.
  • Transportation and logistics. This segment includes companies that provide logistical support and transportation services. Union Pacific is a prime example, operating in the railroad industry, whereas United Parcel Service (UPS) specialises in global package delivery and supply chain management.
  • Aerospace and defence. Firms in this sector engage in the production of commercial aircraft, as well as military weaponry and systems. Boeing and Lockheed Martin are prominent players, delivering a range of products from commercial aeroplanes to advanced defence equipment.
  • Industrial conglomerates. These are corporations that produce a wide array of industrial products and services. General Electric and Honeywell International are examples of conglomerates with diversified interests across various industrial sectors – including aviation, healthcare, and energy.

How to invest in industrial stocks

  1. Open a sharing-dealing account. The first step before investing in industrial stocks is to open a share trading account. Choose a platform that suits your needs, whether it’s one with robust research tools, low fees or a user-friendly interface.
  2. Fund your account. Once your account is set up, deposit funds. You can do that via a bank transfer, debit card or any other means allowed by your platform.
  3. Research and choose industrial stocks. Research the best industrial stocks or industrial funds for your portfolio and then search for them on your chosen platform. You can search by company name or ticker symbol.
  4. Buy shares. Once you’ve found the industrial stock you’re interested in, select the amount you want to invest and buy shares. And just like that, you’re now officially an investor in the industrial sector.

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Why do people want to invest in industrial stocks

One reason to invest in industrial companies is the forecast growth in global population – from 8 billion in 2022 to approximately 8.5 billion by 2030. More people on the planet means more demand for just about everything factories produce.

In particular, investors are expecting to see a decade marked by industrial expansion in sectors such as construction, manufacturing, and energy, to meet the escalating needs of a larger global community.

Advantages of industrial stocks?

Here are some of the powerhouse perks that could rev up your enthusiasm for investing in industrial stocks:

  • Cyclical growth. Industrial companies often track an economy’s growth cycle. During periods of expansion, industries such as construction, manufacturing, and energy tend to enjoy higher demand – potentially leading to stock price increases.
  • Technological integration. As the industrial sector continues to integrate hot new technologies like automation, robotics, and Internet of Things (IoT), companies in this space are often at the forefront of innovation, offering the potential for efficiency gains.
  • Dividends. Many industrial companies are reliable and generous dividend payers. Investing in these companies might make sense for investors wanting a regular income stream, in addition to potential share-price gains. Although dividends aren’t guaranteed.
  • Global reach. Industrial companies often have a vast global presence, serving diverse markets and reducing dependence on any single economy. This global footprint can lead to more opportunities for growth and can act as a buffer against regional economic downturns.

Risks of investing in industrial stocks

Industrial stocks might seem like a no-brainer given how essential these companies are to our everyday lives. But put on your hazard jackets, because there are more than a few dangers you should be aware of:

  • Economic sensitivity. Industrial companies are often cyclical, meaning their performance is closely tied to the health of an economy. In times of a downturn, these companies can experience significant drops in demand and profitability.
  • Technological disruption. Rapid advancements in technology can render certain industrial methods (or products) obsolete. Companies that fail to innovate or adapt to new technologies may struggle to stay competitive.
  • Supply chain vulnerabilities. The industrial sector often relies on complex, global supply chains. Disruptions, whether from geopolitical tensions, natural disasters, or trade disputes, can lead to significant operational challenges and financial losses.
  • Regulatory and environmental risks. Industrial companies, particularly those in sectors like manufacturing and energy, face stringent regulations regarding environmental protection and worker safety. Compliance with these regulations can be costly, and failure to adhere can result in hefty fines and reputational damage.
  • Capital intensity. Substantial capital is usually needed for operations, maintenance and expansion. This high capital requirement can lead to significant debt. Companies carrying substantial debt can struggle when interest rates climb, as their repayment costs can significantly increase.

Expert comment - What's the outlook for industrial stocks in 2024?

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George Sweeney

Deputy editor

No one can predict exactly how a year is going to unfold but there are some factors that could impact the industrial sector throughout the next year. Lower levels of inflation is good news for costs and if interest rates drop, this can also make debt cheaper.

However, if this happens some investors may turn away from sturdy cash-generating industrial stocks, and instead, look more towards growth areas. There's no denying there will be lots of industrial demand as the global population increases, but whether this can be turned into sustainable wide profit margins remains to be seen.

Alternative ways to invest in industrial stocks

Aside from purchasing individual stocks of companies within the industrial sector, there are other alternative methods to gain exposure to industrial stocks. Here are some of your options:

  • Index funds and exchange-traded funds (ETFs). Investing in ETFs or index funds that focus on the industrial sector is a viable alternative to buying individual stocks. These funds represent a collection of various industrial-related stocks, offering broader industry exposure and potentially mitigating risk through diversification.
  • Investment funds. In this scenario, a company pools money from investors and then invests it in a diversified portfolio of stocks. Investors, however, must pay a fee for the professional management of their investments.
  • Investment trusts. These operate similarly to funds, with one important difference. While funds are open-ended, permitting continuous trading of stocks and withdrawals by investors, investment trusts are closed-ended. The capital is locked in, facilitating a more long-term investment strategy.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

Pros and cons


  • Aligns with economic upswings, potentially boosting stock prices
  • Innovation leads to efficiency, keeping companies competitive
  • Can offer regular income through dividend payments


  • Capital intensive, meaning often high level of debt
  • Rapid tech changes can render products or methods obsolete
  • Complex global operations are prone to disruption

Bottom line

Industrial stocks link your portfolio directly to the titans that manufacture everything from combine harvesters to aeroplanes. These companies should thrive with rising demand driven by global population growth. But don’t let the din of the production line deafen you to the risks.

The cyclical nature of industrials means profits and share prices could dive when economic tides turn. In addition, the hefty capital needed for these industrial giants often brings significant debt. As a slice of a diversified portfolio, industrial stocks could help you ride the tide of global economic growth. Remember, it’s not all smooth assembly lines – in the world of industrials, economic sparks can fly.

Frequently asked questions

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