After being hit hard in 2020, America's industry is now booming. Although industrial stocks have rebounded, investors don't need to worry about missing out on gains; Wall Street is still bullish on many industrial stocks.

The $1 trillion infrastructure bill passed by the US Senate has once again attracted the attention of many industrial stocks. The bill is expected to be submitted to the House of Representatives for a vote this fall.

Even before the good news about the infrastructure bill came, the price of industrial stocks had already reflected bullish sentiment. As of August 10, 2021, industrial stocks in the Russell 3000 index were close to a 52-week high, rising about 39% over the past year, exceeding the 32% increase in the S&P 500 index. However, judging from the trend of the past three months, industrial stocks were basically flat, while the S&P 500 index rose 5% over the same period.

There is a reason why the rebound in industrial stocks has been halted. Although industrial activity is growing, it's not fast, and investors are almost always nervous about the slowdown in growth. The ISM Purchasing Managers' Index (PMI), which measures manufacturing activity, was 64.7 in March, but fell to 59.5 in July. When the index is above 50, it indicates that industrial activity is expanding.

The level of PMI for July was healthy, but it also indicates that industrial activity is slowing down. Tim Fiore (Tim Fiore), head of the ISM investigation committee, told Barron's that supply chain disruptions and labor shortages were the main causes, but as a professional studying the field, he believes the expansion of industrial activity is not over yet.

Wall Street also shares this view, as can be seen from the ratio of buying ratings received by industrial stocks. The buy rating ratio refers to the share of buy ratings given by analysts among all ratings.

Nine industrial stocks with a market capitalization of more than 1 billion US dollars in the Russell 3000 index received more than 80% of the purchase ratings. Judging from the target prices given by analysts, these industrial stocks have an average of more than 30% room to rise. By contrast, all stocks in the Russell 3000 Index received an average buy rating of around 61%.

9 industrial stocks that Wall Street is expected to soar

The nine companies are material handling equipment manufacturer Columbus McKinnon (CMCO): Alaska Airlines (ALK), Southwest Airlines (LUV), and Allegiant Travel (ALGT); engineering and construction companies Mastec (MTZ) and Dycom Industries (DY); traditional car manufacturer General Motors (GM); autonomous driving technology company TuSimple (TSP); and electric vehicle charging Device manufacturer ChargePoint (CHPT).

Investors may be surprised by the selection of several companies on this list.

Automakers such as GM are viewed by some investors as non-essential consumer goods companies because most cars are sold to consumers rather than businesses. However, some of these automakers are the world's largest manufacturing companies, so they can be classified as industrial stocks. Airlines are transportation companies, although their business is to transport passengers on leisure and business trips.

In addition to the various industries in which they are located, the companies on the list also have high and low valuations.

Columbus McKinnon is a traditional industrial capital goods company with a price-earnings ratio of about 12 times calculated based on expected profits in 2022. The largest market capitalization on the above list is GM, which is 78.6 billion US dollars. The price-earnings ratio calculated based on expected profit in 2022 is only 7 times. TuSimple and ChargePoint are two new companies that are not expected to be profitable in 2022, but profits are expected to grow rapidly as demand for autonomous driving technology and electric vehicles increases.

Screening stocks is only a starting point; after discovering the potential of these companies, investors still need to do further research.