The industrial sector, from a big-picture perspective, sells products to other companies. There are many iconic names in the space, like Stanley Black & Decker (SWK 0.53%) and Rockwell Automation (ROK 0.68%), that have seen their shares fall of late. There are good reasons for concern, but this cyclical industry often provides the best investment opportunities when Wall Street is in a dour mood. Here's why you might want to hold your nose and buy these two stocks if you have some cash sitting around.

1. Tools are a necessity

Stanley Black & Decker's stock has been down around 35% so far in 2022, way worse than the S&P 500 Index's roughly 16% decline. Vanguard Industrials ETF, a rough proxy for the industrial sector, has been off around 15%. Stanley Black & Decker's main businesses are making tools and fasteners, both of which are products that its customers need to do their jobs. While demand will ebb and flow with economic activity, it is highly unlikely to fall to zero.

In the first quarter, Stanley trimmed its full-year 2022 adjusted earnings guidance range to $9.50 to $10.50 per share, down from a range of $12.00 to $12.50. It followed that up in the second quarter by trimming guidance again, this time to a range of $5.00 to $6.00 per share. Investors are understandably worried, noting that supply chain issues and inflationary cost pressures were big issues. In the latter half of the second quarter, sales also started to slow down, reflecting the industrial company's sensitivity to economic cycles. However, the company has a market-leading position in tools with brands such as Stanley, Black & Decker, DeWalt, and MAC Tools. The business is robust, even if there is weakness over shorter periods. 

Right now, Stanley is doing the things you would expect, including increasing prices and trying to shore up its supply chain. It is also working to streamline its business, selling off divisions that aren't core, including security and door openers, and agreeing to divest its oil and gas pipeline services operation. This will free up cash that can be used for other purposes, like debt reduction and stock buybacks, and allow management to focus all of its attention on its remaining operations. Things might be tough right now, but when the hard times eventually turn into good times, Stanley Black & Decker will likely come out as a stronger company on the other side.

2. More technology, not less

Rockwell Automation's stock is down around 35% or so this year. As its name implies, it provides automation equipment and services to companies that are looking to cut costs and streamline operations. That's not something that's likely to fall out of favor for very long, with more business automation far more likely than a global shift back to human labor.

When Rockwell reported fiscal second-quarter earnings, it lowered full-year organic sales guidance to a range of 10% to 14%, down from 14% to 17%. It lowered the top end again when it reported fiscal third-quarter results, dropping the guidance range to 10% to 12%. Adjusted earnings guidance fell to a range of $9.20 to $9.80 from $10.50 to $11.10 after the second quarter, with the range tightening to $9.30 to $9.70 with the release of the company's fiscal third-quarter results. One big issue for management has been procuring enough parts to meet demand. In fact, the company said its backlog of work to be done was sitting at record levels.

The business is not in trouble, though the near term may not be as great as previously expected. And, when you step back, it's hard to complain about 10% organic growth. If you are a long-term investor, the current pullback could be an opportunity to get on board a company with still-solid demand.

Ups and downs

Nothing rises or falls in a straight line, so long-term investors need to step back and consider what is happening today versus what the future might hold. Stanley and Rockwell both have strong industry positions, and the products they sell are not going to fall out of style. Yes, their industrial businesses are cyclical, but that just means that drawdowns can offer good buying opportunities as these industry leaders continue to grow their businesses over time. With the stocks weak, now would be a good time to do a deep dive.