24/7 Wall St.

As the country slowly has emerged from the gut-wrenching recession of 2008 and 2009, several industries have helped to lead the recovery. We have covered in great detail not only the reemergence of the home building sector, but also the oil and gas industry providing opportunity and jobs with large shale oil and gas activity. A common theme in a recovering economy is the wealth starts to spread to other industries as a result of overall demand. In a research report out today, Oppenheimer sees current economic growth leading to robust earnings for some industrial stocks in the second half of this year.

The Oppenheimer analysts note in their report that not only has growth started to revive the economic engine in the United States, but companies have also seen improvement in Brazil and China, and while they still expect continued European softness (with some signs of stabilization), they expect modest, but a broad-based North American expansion led by oil and gas, aerospace and residential markets.

Given widespread multiple expansion in the industrial companies the analysts cover, they look for the best combination of:

1. A case for structural margin traction and growth
2. Remaining relative multiple headroom, expanding current price to earnings higher
3. Relative visibility of organic opportunity and the ability to grow a company’s business

Using those three areas as a guideline, they have searched for stocks that may have significant earnings growth as the U.S. economy expands in the second half of 2013. Here are the industrial stocks that fit that criteria.

Diversified industrial powerhouse Honeywell International Inc. (NYSE: HON) leads off the Oppenheimer list. The analysts also note very large (and order-driven) capacity expansion at the specialty materials division, which bodes well for the next couple of years. They expect second half earnings growth of 11%. The Thomson/First Call consensus price target for the stock is $77.

Based in Ireland, Eaton Corp. PLC (NYSE: ETN) makes the list. A strong infrastructure play, Eaton operates as a diversified power management company worldwide, and it has expected earnings growth of 28% in the second half. The Wall St. price target is $68.

Nordson Corp. (NASDAQ: NDSN), with multiple divisions to drive growth, engineers, manufactures and markets products and systems for precision dispensing and processing, fluid management, testing and inspection, surface treatment and curing. Oppenheimer expects earnings growth of 17% in the second half of 2013. The Wall St. consensus price target is $74.

Hitting new highs, electrical product maker WESCO International Inc. (NYSE: WCC) is poised for second-half earnings growth of a staggering 40%, if the analysts at Oppenheimer are correct. The consensus price target for the Pittsburgh-based industrial leader is $79.50.

Based in Switzerland, Pentair Ltd. (NYSE: PNR) looks poised for strong growth. Providing multiple solutions for water and fluids management, it is expected to grow earnings 39% in the second part of this year. The consensus price target for the stock is $57.

Regal Beloit Corp. (NYSE: RBC) manufactures and sells electric motors and controls, electric generators and mechanical motion control products in the United States, Asia and internationally. Its growing business is expected to drive 18% second-half earnings growth. The consensus price target for the stock is $83.50.

The team at Oppenheimer makes it clear in their research that there can always be extenuating circumstances that change or alter earnings growth. The most important thing to remember is that economic growth, both here in the United States and in growing countries around the world, will drive earnings growth for these solid industrial names.