Ahead of each new year it is expected that major brokerage firms and research firms will issue their year-ahead targets for the markets and for groups of stocks. BofA Securities has been releasing its top picks for 2025, and there are 5 large-cap industrial stocks that are the firm’s top picks for the year ahead.
First and foremost, Oggonomics always reminds investors and its readers that no single analyst report should ever be the sole basis to buy or sell a stock. That decision to buy or sell, or hold or short sell, is up to each investor and that decision should be made with a financial advisor. These ratings and price targets are from BofA Securities.
The research team led by Andrew Obin sees four key themes for multi-industrials in 2025. While the secular themes of electrical, data centers and grid that dominated 2024 should continue to work into 2025, BofA expects a robust cyclical recovery to drive upside to short-cycle earnings and stocks. The firm does warn that a key question for investors will likely be timing.
The four themes for these multi-industrials start with an improving PMI, with industrial production driving the US manufacturing PMI index back above 50 in April. The firm notes that these beneficiaries outperform the S&P 500 index by 9% in the year following PMIs rising above 50. Another issue will be the focus on tariffs. Obin’s team report said:
A 10% across-the-board tariff would drag margins by ~120bp margin on average, by our estimate. We believe that our coverage will be able to offset tariffs with pricing. Overall, tariffs are likely manageable for multi-industrials. That said, we believe tariffs would be a negative headline for our stocks and there is a potential for a price/cost air pocket.
With two themes remaining, one is that capital spending will keep growing in the high single digits and the remaining issues are on reshoring back to America and automation combined. Construction spending is expected to keep rising in a broader-base than just computer, electronic, and electrical manufacturing. With a boost in reshoring the incoming Trump administration is viewed as likely to enact policies to further advance US manufacturing. And automation will prevail under this theme as wage inflation and labor availability remain challenging.
That said, here are BofA’s top 5 industrial picks for 2025. These are listed in alphabetical order to prevent any appearance of ranking. Three small-cap to mid-cap picks were also named without the detailed explanations.
AMETEK
AMETEK, Inc. (NYSE: AME) is listed as having cyclical torque and a quality business that should win from reshoring with high exposure to short cycle industrial trends. Ametek makes highly engineered components for niche markets and has strong pricing power. With leading indicators turning positive and with its OEM customer destocking trends largely over, BofA sees Ametek’s underlying cyclical leverage shining through in 2025. And as its CEO started eight years ago, Ametek has met or beat consensus EPS estimates each quarter. The team is also said to have performed well during US-China tariffs, COVID, and the supply chain crunch. Ametek’s $225 price objective implies about 25% upside over the $180 price.
DOVER
Dover Corp. (NYSE: DOV) is seen having revenue acceleration and capital deployment in 2025 and is viewed to be winning from reshoring, also with a high exposure to short cycle industrial trends. It also stands out as having lower risk around initial 2025 guidance. It also trades at a slight discount to multi-industrial peers due to slower near-term revenue growth. BofA’s $240 price objective implies 26% upside from the $190 price before the 1.1% dividend yield is considered.
EMERSON
Emerson Electric Co. (NYSE: EMR) is expected to benefit from increased investment in process end markets and it has an attractive valuation per BofA’s 2025 top picks report. Roughly a third of its revenue is poised to accelerate in 2025 with growth in discreet automation, test and measurement, and Aspen Tech. EMR shares are also viewed as having less downside risk as maintenance, repair, and overhaul work represent a combined 64% of sales. Emerson’s $150 price objective implies 20% upside from the $125 share price before considering the 1.7% dividend yield.
GE VERNOVA
GE Vernova (NYSE: GEV) has been a winner from the electric/grid buildout and is viewed as a continued beneficiary of rising electricity load growth and grid investment. The company has raised pricing several times for heavy-duty gas power turbines and is slated to begin increasing capacity from 55/year to 80/year beginning in 2026. Another driver is that the average price for large step-up power transformers in grid equipment has risen over 50% in the last 5 year period and long lead times support further price increases as it doubles its capacity on transformers and switchgear over the next 3-year period. BofA’s $380 price objective is above the $320 price as of the time of the report. That’s almost 19% implied upside if BofA’s these plays out.
PARKER-HANNIFIN
Parker-Hannifin Corporation (NYSE: PH) is another expected beneficiary of reshoring with high exposure to short cycle industrial trends. BofA sees positive earnings revisions on aerospace and higher margins all acting to reduce its earnings cyclicality. The firm also sees accelerated sales growth in an economic upturn. BofA recently raised its price objective to $800 from $750. With shares at $645, that implies upside of 24% if BofA’s thesis proves to be true. Parker-Hannifin also pays a 1% dividend yield.
SMID BONUS PICKS
BofA’s team outlook of top picks for 2025 also included three small-cap to mid-cap picks:
- RUSHA has a $70 price objective, versus $55 at present time.
- ITT has a $175 price objective, versus $144 at present time.
- FLS has a $72 price objective, versus $58 at present time.
All price targets and Buy-rated picks listed herein are from BofA Securities. This list could easily change as 2025 kicks off and as share prices and more finite data become known. Oggonomics does not maintain any ratings or formal price targets on any of the companies mentioned in this report.
