There is a lot of variety within the industrial sector. From railways and airlines to engineering companies, several stocks have little to no correlation with one another. So, when some industrial stocks sink, others might be rising. This is great from a diversification perspective — you can achieve an adequate level without expanding out of the sector.
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An engineering and professional services company
WSP Global (TSX: WSP) is one of the world’s largest engineering and professional services companies. It has a massive network of professionals worldwide and provides solutions and consultation services to a wide range of industries, including construction, transportation, energy, climate, etc. It also caters to multiple markets, including Canada, the Americas, EMEIA, and Asia Pacific countries.
Earth and environment solution and services segments have made up a significant portion of the total business conducted in all four market segments. This shows that the company is at the cutting edge of sustainability issues around the globe, making it an attractive pick from ESG (environmental, social, and governance) investing perspective as well.
Apart from its business strengths, the most significant reason to buy this stock is its performance. It has risen by over 190% in the last five years.
Construction machinery dealers
Toromont Industries (TSX: TIH) is one of the largest dealers of Caterpillar machinery in the world. That and other equipment (sales, services, rental) are its primary business and fall under its equipment group. They made up 87% of the total revenue last year.
Its other business, i.e., thermal management solution (under the name CIMCO), represents a relatively small slice of the overall business, but it’s rapidly gaining traction.
It’s one of the oldest Dividend Aristocrats in Canada and has been growing its payouts for 31 consecutive years. However, since the yield is usually low (currently at 1.6%), it tends to fly under the radar of dividend investors. However, its growth potential makes up for the lacking dividend. It rose by about 68% in the last five years, and these are among its slow years. The collective return potential makes it a solid industrial pick.
An auction company
RB Global (TSX: RBA) is primarily an auction company. It conducts auctions of industrial machinery and other equipment. However, the company has grown its business model over the years. It has multiple brands under its banner.
This includes a marketplace for total loss vehicles, an online marketplace for industrial equipment, and a marketplace for government surplus equipment. The company is registered in Canada but based in the U.S.
As a leader in this industry and a diverse business model, RB Global is a compelling long-term investment. It’s also an established Dividend Aristocrat with a relatively small yield (1.6%). However, the real reason for considering this is its growth potential. It has risen by about 126% in the last five years.
Foolish takeaway
All three companies are currently in a bull market phase. But their performance history indicates that it’s not a temporary momentum that may run out of steam in a few months. You can buy and hold them for years for their growth potential.
