Industrial companies are important for investors to add to their portfolios for a few reasons. Diversifying an investment portfolio is a good idea, especially in uncertain economic times. It is best to invest equally in multiple industries, not to spread yourself too thin and risk significant losses if one sector falters. Industrials are a part of our everyday lives, from manufacturing equipment to passenger airlines, helping the world around us operate. Buying undervalued industrial stocks is a good idea for multiple reasons.
Value investing is a great strategy for investors looking to maximize gains and minimize losses. Waiting to buy into a company once a downturn in its overall stock price takes place is a great way to grow your investment portfolio. It is best to understand why a particular company’s stock price is falling and if it is due to outside factors such as industry-wide struggles or whether it is an underlying issue with the company financials, leadership issues or any other factor that may be the reason the company is trading at such a discount.
Below, I discuss three different industrial stocks that, in my opinion, are undervalued due to factors such as lawsuits piling up and uncertainty around the airline industry. These companies have solid financials and offer investors who are looking for a buying opportunity for stocks trading at a discount. These are three undervalued stocks to buy.
3M (MMM)
Located in Saint Paul, Minnesota, 3M (NYSE:MMM) operates as an industrial conglomerate company. It provides equipment and services for a wide range of industries. These include industrial abrasive solutions for metalworking, reflective signage, infection-preventive equipment and filtration systems used in the transportation industry.
Over the past year, the stock price has fallen approximately 23% due to investors’ uncertainty surrounding recent lawsuits, most notably a $10 billion settlement with various public water systems in the U.S. due to the presence of hazardous chemicals in drinking water.
But with a positive earnings release on October 24 and raised future guidance, their stock price grew by 5%.
Delta Air Lines (DAL)
Headquartered in Atlanta, Georgia, Delta Air Lines (NASDAQ:DAL) is a passenger airline company that operates domestic and international flights. It also provides maintenance and repair solutions and has a fleet of over 1,200 different aircraft.
The company’s stock price has fallen in the last year by 4%. Competitors American Airlines (NASDAQ:AAL) dropped by 20%, and United Airlines (NASDAQ:UAL) fell by 16% in the same period.
Delta Air Lines recently reported third-quarter earnings results on October 12, stating an increase in total revenue of approximately 36% and net income by 59%, compared to the third quarter of 2022. It also took delivery of 10 different aircraft in this quarter alone and operated as the most on-time airline during the third quarter of 2023.
Rolls-Royce (RYCEY)
Rolls-Royce (OTC:RYCEY), located in London, United Kingdom, is an aerospace and defense company that manufactures and sells engines for use in commercial, business and military aircraft. They are also developing nuclear submarine plants and small reactor systems.
Rolls-Royce released its earnings report for half-year 2023 in August, stating a 31% increase in total revenue and operating profits that has grown five-fold compared to the half-year report for 2022. Its guidance was raised for the remainder of 2023. Rolls-Royce also experienced higher sales volume in their civil defense segment.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.