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3 Industrial Stocks to Help Build Your 2023 Watchlist

3 Industrial Stocks to Help Build Your 2023 Watchlist

Key Points

  • The industrial sector is likely to benefit from increased infrastructure spending in 2023. 
  • This small-cap stock has an intriguing niche in industrial lighting. 
  • You may also want to look at this mid-cap, which plays an essential role in securing its customers’ networks. 
  • Investors may find this Dividend King attractive as they look for gains wherever they can find them. 
  • 5 stocks we like better than Caterpillar

The industrial sector will be one to watch in 2023. And in this article, you’ll get three industrial stocks that present an opportunity for investors of all styles. You’ll get one small-cap stock, one mid-cap stock and one large-cap stock for your consideration.  

The effects of government policy take time to filter into the economy. And so it is that many corporations are only now beginning to experience the benefits of the infrastructure act passed in Congress in 2022. Investors are beginning to see this activity in the stock prices of heavy equipment makers like Caterpillar Inc. NYSE: CAT.  

The three companies in this article have different industrial applications. But each aligns with a segment of the economy that will lead into the future. Here are the three picks: 

A Potential Game Changer in Industrial Lighting 

LSI Industries Inc. NASDAQ: LYTS is the small-cap stock on this list. The company has a market cap of just over $330 million as of December 27, 2022. LSI Industries makes commercial lighting and retail display solutions. It has one niche. However, that may be a game changer.  

The company’s REDiMount system promises to reduce “the time necessary to install a canopy fixture by over 50%.” The company claims it will be a new standard for canopy lighting solutions. What’s even more promising is that one of the applications for this product will be in refueling stations.  

As a small-cap stock, LSI Industries doesn’t enjoy the same analyst coverage as larger stocks. But the company does hold a Buy rating even as LYTS stock is trading near its 52-week high. The stock is trading at an attractive P/E ratio of just 18x earnings, and the prices have been consolidating lately, pointing to the possibility of a strong move higher.  

A Mid-Cap Stock That Helps Keep Networks Secure 

Belden, Inc. NYSE: BDC is the mid-cap option of this trio. Belden provides specialized networking solutions to a global client base. The company has two business units: the Enterprise Solutions segment and the Industrial Solutions segment. 

A bullish consideration for Belden in 2022 is its link to cybersecurity. The company’s products are essential to protecting a company’s network. This is particularly critical for data centers – a prime target for cybercriminals. 

BDC stock is up 12% in the last 12 months, and analysts tracked by MarketBeat suggest it has an upside of another 13%. The stock is also near its 52-week high, which is significant because the S&P 500 is near its 52-week low. And Belden stock has heavy institutional ownership, which has the benefit of keeping it more stable than some other stocks.  

This Company May Reward the Patience of Investors 

Emerson Electric Co. NYSE: EMR is the large-cap stock of this trio. For most of 2022, EMR stock has been caught in the general malaise of the broader market. Before October, the stock was down 21%. But in the last quarter, the company has found its stride. It’s up approximately 32% and is now trading at the upper end of its 52-week range. 

Emerson Electric is pivoting to becoming a pure-play automation company that can compete with Rockwell Automation, Inc. NYSE: ROK. This restructuring has come at the expense of earnings and may continue to be a slight drag in 2023.  

That has some analysts skeptical of buying the stock, which has a consensus rating of Hold. However, in 2023 the opportunity in Emerson Electric is likely to come from the company’s dividend. Emerson is part of the exclusive Dividend King club. It has increased its dividend in the last 65 consecutive years and yielded around 2.18%. That makes EMR stock an appealing choice for investors looking for gains wherever they can get them. 

Should you invest $1,000 in Caterpillar right now?

Before you consider Caterpillar, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Caterpillar wasn't on the list.

While Caterpillar currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Chris Markoch
About The Editor

Chris Markoch

Editor & Contributing Author

Retirement, Individual Investing

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Caterpillar (CAT)
4.6659 of 5 stars
4.67 / 5 stars
LSI Industries (LYTS)
4.6067 of 5 stars
4.61 / 5 stars
Belden (BDC)
4.7325 of 5 stars
4.73 / 5 stars
$91.84-2.9%0.22%17.97Moderate Buy$108.80
Emerson Electric (EMR)
4.6275 of 5 stars
4.63 / 5 stars
$115.68-0.7%1.82%6.19Moderate Buy$123.44
Rockwell Automation (ROK)
4.9293 of 5 stars
4.93 / 5 stars
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