The industrial sector has its share of glamorous names and history actions. Caterpillar, Deereand some large-cap aerospace and defense companies check those boxes.
However, the group, the sixth largest sector in the S&P 500It still includes some companies that are not exactly charismatic. Some may be downright boring, but there are examples of boring being beautiful, and W. W. Grainger (NYSE: GWW) it could become so.
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The industrial parts supplier has some credibility as a hidden gem for multiple reasons, including its underrated business model and a four-figure price tag that’s likely to keep some retail investors cornered Fortunately, there’s more to like about Grainger’s story.
Founded almost a century ago, Grainger operates in the maintenance, repair and operations (MRO) space. Corporate jargon aside, the company sells a variety of products that aren’t “sexy,” but are essential to helping factories, warehouses, and other commercial enterprises function on a day-to-day basis.
One interesting thing about that industry is that it is fragmented. There are great actors like Grainger and Amazon (NASDAQ:AMZN)as well as a number of smaller contenders. So yes, there is competition, but scale is essential, and Grainger has it, confirming its status as a wide-moat name.
This is one way of looking at Grainger. Let’s say you are the manager of an appliance factory that employs 100 people. It is possible that for everything to work smoothly, several hundred, or even thousands, of parts, parts and other details may be needed.
Getting those products from multiple suppliers is cumbersome. Grainger alleviates that burden by stocking millions of items, helping it build a strong customer base.
Those are some of the reasons why some analysts see Grainger as one of the top industrial stocks to own. Beyond the wide moat, there are other catalysts for this industrial stock, including one with a political element.
Bipartisanship is difficult to achieve in the current environment. Still, both major parties are trying to bring more manufacturing jobs to the U.S. If those efforts bear fruit and more factories, industrial facilities and warehouses are built, Grainger will benefit. After all, a factory can’t run with empty shelves.