The Best 3 Industrial Stocks to Buy in March
Key Points
Generac is capitalizing on strong demand for backup power solutions for data centers.
Quanta Services' power infrastructure solutions benefit from rising electricity demand and power grid upgrades.
RTX is a leader in aerospace and defense with a diverse and steady revenue stream.
Industrial companies build the backbone of modern energy infrastructure, energy resilience, engineering and construction, and aerospace and defense technologies. These companies are crucial to the economy and enjoy steady demand, providing them with stability and long-term growth potential. If this sounds appealing to you, here are three excellent industrial stocks to buy in March.
Image source: Getty Images.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Generac's backup power solutions are seeing strong demand from data centers
Generac (NYSE: GNRC) manufactures backup power generation and energy technology solutions, and is best known for its dominant position in the home standby generator market. It boasts a massive global network of 9,400 independent dealers along with thousands of retail and wholesale partners. In recent years, the company has expanded into a broader energy ecosystem, including its solar energy storage system, PWRcell2, and other grid services.
The company is capitalizing on the rapid adoption of artificial intelligence and the massive capital investments being made by hyperscalers and data center operators. To meet AI's growing hunger for power, the company has introduced a line of large MW diesel generators. In addition, in February, the company signed an agreement to acquire Enercon Engineering, giving it an expert in specialized manufacturing for custom industrial enclosures, switchgear, and generator packaging to meet surging demand for data center backup power.
Its backlog for these large data center generators has grown to $400 million, with most expected to ship this year. The company projects that the total addressable market for large MW diesel backup generators could reach $15 billion annually. Looking ahead, management projects mid-teens net sales growth and expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin to expand. In its Commercial and Industrial (C&I) segment, the company foresees a 30% surge driven by revenue from data center customers.
Quanta Services' power solutions are projected for strong growth
Quanta Services (NYSE: PWR) provides infrastructure solutions for electric power, renewable energy, and underground utility sectors. It generates revenue through large-scale engineering, procurement, and construction (EPC) contracts and recurring revenue from long-term maintenance agreements across a range of industries.
The company is another beneficiary of surging electricity demand, driven by data centers, domestic manufacturing reshoring, and the overall electrification of the power grid. Because modern artificial intelligence training and inference require significant electricity, there is a need for expanded transmission and distribution infrastructure to reliably transport power. This is where Quanta comes in, providing turnkey solutions that cover everything from high-voltage transmission interconnections to low-voltage electrical systems within data center facilities.
In recent years, the company has acquired businesses such as Cupertino Electric and Dynamic Systems, expanding its capabilities to serve large load facilities and data centers. The company's backlog has grown 27% year over year to $44 billion. Management issued revenue guidance of $33.5 billion at the midpoint for this year, along with adjusted earnings per share guidance of $13, representing 21% year-over-year growth. Its strong growth has Goldman Sachs analyst Ati Modak projecting robust EPS growth of 17% to 18% annually through 2030.
RTX is a top aerospace and defense company with steady growth
RTX (NYSE: RTX) is a global aerospace and defense company that provides avionics and aerostructures, aircraft engines, and missile defense products. The company supplies critical hardware and services to commercial airlines and government defense agencies. Its revenue is well diversified across markets and customer segments, with 48% from the aerospace market and 52% from defense and government customers.
The company has a high-margin aftermarket services business that includes spare parts, overhauls, repairs, and fleet management, which supports growth and profitability. Because aircraft engines and components have lifespans that span decades, this provides the company with a steady stream of recurring revenue over a long time horizon. Roughly 50% of RTX's backlog is related to long-term aerospace maintenance contracts at Pratt & Whitney.
RTX is seeing "a heightened need for munitions and integrated air and missile defense as the U.S. and partner countries work to replenish inventories, modernize existing systems and invest in new capabilities," according to CEO Christopher Calio. As a result, its backlog has grown to $268 billion, and it is guiding for adjusted EPS of $6.70 at the midpoint, representing 6.5% growth year over year. For investors seeking stable growth, RTX is another excellent industrial stock to buy today.
Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Quanta Services, and RTX. The Motley Fool has a disclosure policy.