A Bevy Of Industrials

The FTSE's industrial sectors are home to a lot of very good companies, with some solid investments to be found amongst them.

That's what we're doing today, and the table below contains the constituents of four actual FTSE sectors related to industry -- General Industrials, Industrial Engineering, Industrial Metals & Mining, and Industrial Transportation.

As usual, the list includes all companies from the FTSE main list, and all AIM companies with market capitalization values of over £50m.

Let's look at a few examples, from various parts of the scale, starting with the biggest three.

The big three

Smiths Group, which turns over more than £2.4bn a year, operates in a wide range of fields, including medical equipment, machinery designed for harsh environments (even Mars), sensor detection of explosives and drugs, and a good few other things. And despite the global recession, earnings in 2009 only dipped by about 15%, with a decent rise forecast for this year and next.

Second placed Tomkins, whose business interests aren't as diverse as Smiths', with two divisions: Industrial & Automotive and Building Products, unsurprisingly had a tougher time of the recession, with earnings falling by a half for the year ending January 2010. It is set to recover in 2011 and then some, with further earnings growth forecast for 2012, although it is currently subject to a takeover bid. 

And third in the table Rexam makes consumer packaging, which is hardly a glamorous business, but it's clearly a vital one -- it might not make any investor a 10-bagger any time soon, but it's not a company that's going to run short of business either.

What do these three have in common? They all have net cash, are all in long-term robust businesses (even if Tomkins is perhaps a little more susceptible to economic cycles), all carry net cash on their books, and they're all on reasonable, if not spectacularly cheap, valuations. 

Smiths and Tomkins are on P/E ratios of about 14 for their next full year end, falling to about 12 for the year after, and are offering dividend yields of around 2.5 to 3. And Rexam, with its less volatile business, is unsurprisingly lower valued, with a P/E of 10.5 for this year and 9.5 for next, and a dividend yield of about 4%. 

They're all solid companies that would make good portfolio candidates for those who don't want too much excitement.

Lower down the ranks

At the other end of the scale we have companies like Goodwin, which has attracted Foolish attention in the past, most recently by Owain Bennellack on the occasion of the company's recent preliminary results. Perhaps surprisingly for such a small company, revenue only dipped a little during the recession, and profits held up. And the company has a reputation for being well managed by its founding family.

Then there's a whole raft of middle-sized companies, like Severfield-Rowen, which impressed David Holding with its interim results last week, and Stobart Group, whose famously liveried vehicles have engaged many a bored traveling child in games of 'Eddie spotting' up and down Britain's motorways. Again, both are debt free and are on modest P/E ratios.

And... well, as you can see, there's a whole host of possibly unexciting but good quality companies amongst these sectors, and while we often caution that some sectors are not ideal for widows and orphans, these are some that probably are.

If you have any favourites, or know of any overlooked gems amongst these companies, please do let us know, below.

Previous Sector Analyses

• Invest In Investment
• A Grand Tour Of The Retail Sector
• High Flyers And Big Guns

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