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There's no doubt that 2010 has been a rough year for investors. First the BP oil spill, then the sovereign debt crisis in Europe, followed by bad payroll reports and stagnant unemployment. The robust recovery we saw in 2009 has almost all but disappeared, replaced with an up-and-down market that can seem unnerving at best, and simply irrational at worst.

As you can imagine, investors have been heading for the equity doors and into the bond room. Billions of dollars have gone into bonds or bond funds so far this year, and unfortunately, much of that money has come at the expense of equity funds.

Academics and investors alike have pointed to the past decade as proof that buy-and-hold investing is dead, and that the equity premiums we once saw are only a present-day myth. In my opinion, that's just crazy talk. Of course, now is an easy time to call it quits on investing -- the market is volatile, there's lots of uncertainty, and it seems like all the news and recent headlines have been nothing but negative.

But give up on investing? I don't think so.

Nevertheless, it is seriously worth the time to evaluate your portfolio in order to see what stocks are going to keep you up at night and which ones may let you sleep soundly. In this series, I've identified the top seven industrial stocks that have extreme volatility, are trading way below their 12-month highs, yet still have the coveted five-star ranking of our 165,000-strong CAPS investing community.



3-Year Beta

% Below 12-Month High

NN (Nasdaq: NNBR  )

Industrial Machinery



Chart Industries (Nasdaq: GTLS  )

Industrial Machinery



Manitowoc (NYSE: MTW  )

Construction & Farm Machinery



Mueller Water Products (NYSE: MWA  )

Industrial Machinery



Chicago Bridge & Iron (NYSE: CBI  )

Construction & Engineering



Graham (NYSE: GHM  )

Industrial Machinery



GrafTech International (NYSE: GTI  )

Electronic Components & Equipment



Source: Motley Fool CAPS, data as of Sept. 1.

Our crowd of Foolish investors is has a pretty good track record of identifying stocks that can outperform the market, and five-star stocks often follow that path pretty well. However, these seven stocks have taken investors on a roller-coaster ride that may not ultimately be worth it.

Make sure to do your own due diligence and check out whether these industrial stocks have what it takes to bounce back, and if you've got the stomach to handle the volatility.

Have a strong opinion on one of these companies? Sound off in the comments below!

Jordan DiPietro owns no shares. Chicago Bridge & Iron is a Global Gains selection. Mueller Water Products is a Motley Fool Hidden Gems pick. Try any of our Foolish newsletter services free for 30 days. The Fool owns shares of GrafTech International. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 05, 2010, at 10:27 AM, rd80 wrote:

    I'm hanging on to small positions in two of them - GHM and NNBR.

    NNBR is a 'coming back from near death' story. The weak economy, problems getting a new plant in China on line and debt burden had survival in question in early '09. Sales have been increasing, company reported positive earnings the past two quarters. Not entirely out of the woods yet, but things have been looking up. I sold half my position several months ago (too early) and am playing with the house's money on this one. With a buy at $1.14, this is the biggest percentage gainer I've ever had. No plans to add to it here.

    The hit from a weak economy applies to GHM as well, but it has a balance sheet with lots of cash and almost no debt. Orders for refinery and process equipment have been weak, but the company has been profitable throughout the recession, thanks partly to a Navy aircraft carrier heat exchanger order. Nearly half the market cap is net cash; no danger of going under here. When/if the economy shows real signs of life, GHM will rock; until then it probably hacks around in a trading range. With the disclaimer that I'm terrible at the buy-sell-hold thing, I'd rate this a buy up to about $16/share. I recently added to my position in GHM when it was under $14.

    Both of these can be volatile and sometimes have thin volume and wide spreads between the bid/ask. If you're going to play, do your own research and use limit orders.

  • Report this Comment On September 08, 2010, at 10:51 AM, KARABALIS wrote:

    Graham is a wonderful, small, profitable company. Almost no debt, a backlog of orders and a strong cash position. I bought initially around $15. and doubled up at around $8.00. The stock is now trading near $15.00. At its height three or so years ago, it was the top rated stock by Barron's at over $100.00/share.

    This is easily a $50.00 stock in excellent economic times. I look forward to three years from now.

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