Our #1 Infrastructure Stock to Watch Now

A lot of investors are watching Eaton (NYSE: ETN) right now.

There's a good reason: It is a genuinely great business.

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Power management infrastructure, data center exposure, electrification tailwinds. The long-term story is real, and for a long time our ratings reflected it. Eaton was an A-rated Strong Buy in our system.

But it's not anymore. 

The tide has changed, and ETN is currently scoring Cs across the board and has been downgraded to a hold by our Zen Ratings system:

When a stock falls that far in our ratings, it's worth asking why. And whether there's a smarter way to own the same infrastructure trend without the baggage that's dragging Eaton down.

What Changed on ETN

The problem isn't the business. It's the combination of a premium valuation meeting real operational pressure.

Eaton's most recent quarter showed segment operating margins contracting 120 basis points, with Electrical Americas margins falling a more dramatic 440 basis points, raising questions about the company's ability to manage growth profitably while simultaneously integrating three major acquisitions.

But there’s another stock that offers similar exposure that has better fundamentals…

A Different Way to Play the Same Trend

Gorman-Rupp (NYSE: GRC) has been making pumps since 1933.

Water, wastewater, fire suppression, construction, agriculture, municipal infrastructure. It's unglamorous by design: the kind of company that never shows up in AI headlines or electrification investment decks. It just quietly makes the equipment that keeps water moving through American cities, farms, and industrial facilities.

That's the picks-and-shovels play on infrastructure itself. Not a bet on any single end market or technology cycle. A toll on the physical systems society can't function without.

The Tailwind Nobody Is Talking About

U.S. water infrastructure is aging, and replacing it is a multi-year spending cycle with genuine bipartisan political support. Unlike discretionary capital projects that get shelved when sentiment shifts, municipal water and wastewater upgrades are funded years in advance through dedicated budgets that don't disappear with the market.

That's showing up directly in GRC's results. Q1 results showed municipal market growth driven by increased water and wastewater projects tied to infrastructure investment, alongside growth in construction, agriculture, and industrial markets, and even a contribution from data center-related OEM demand.

The demand is broad-based. And the backlog says it's not slowing down. Backlog stood at $247.9 million as of March 31, up 13.8% year-over-year, with incoming orders for the quarter totaling $187.5 million, which is a 5.5% increase from the prior year.

Gorman-Rupp has also raised its dividend for more than 50 consecutive years: one of the longest streaks of any industrial company in the market.

What Our Ratings Are Saying

GRC scores an A overall in a sector rated B. That's the top-ranked name in specialty industrial machinery, the same sector Eaton operates in.

It’s also scoring an A in our Sentiment Grade, suggesting growing institutional interest in a name that most investors still haven't found.

That's the setup our Sentiment system is built to identify.

GRC is also scoring a B across 3 other Component Grades. Click here to see which ones.

Bottom Line?

The long-term infrastructure story hasn't disappeared. GRC is just a less obvious way to own the same trend. Essential infrastructure exposure, a backlog growing nearly 14% year-over-year, 50+ years of consecutive dividend increases, and less of the sentiment baggage weighing on more obvious names.

[Add GRC to your watchlist]

[See all top-rated Industrial stocks]

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