2 Blue Chip Industrial Stocks I'd Buy Into This Week's Weakness Without Hesitation

If there's a problem with bull markets, it's that pullbacks can be hard to come by. Compounding that issue is that "weak" is a subjective term for many investors. For some market participants, a stock faltering 2% or 3% over just a few days is inviting. For others, that's not enough retrenchment.

If the stocks in question are quality names already in strong uptrends, waiting on deep pullbacks may be a fool's errand. So with some stocks, getting in the game on modest pullbacks may be the best course of action. That gets me to a pair of industrial stocks I'm eyeing that have traded slightly lower in recent days.

These two industrial stocks pulled back slightly and it might be time to get involved. Image source: Getty Images.

The blue chip stocks I'm talking about are Canadian National Railway (NYSE: CNI) and Johnson Controls (NYSE: JCI). These aren't the most popular industrial stocks on the market, but their modest pullbacks may be invitations to get involved.

Working on the railroad

Relative to a 17.3% year-to-date gain, Canadian National's 1.5% decline for the week ending June 24 is modest and not a cause for alarm. Investors considering this railroad stock as a long-term position may be gambling if they wait for a deeper retreat or a correction to emerge because this is a fundamentally sturdy company.

Broadly speaking, railroads are impressive cash-flow generators, and this Canadian operator lives up to that standard, having generated high-teens cash flow as a percentage of revenue over the past decade. Another point in favor of Canadian National is its enviable geography, a crucial consideration for investors evaluating railroad equities.

The company controls a 19,500-mile network in North America that spans both coasts of its namesake country, running from the Canada/U.S. border down to the Gulf Coast. It also has a monopoly over Canada's port of Prince Rupert, which catalyzes intermodal growth.

Adding to the buy thesis on Canadian National is an efficient operating model. Last year, revenue was pinched by $350 million due to U.S. trade tariffs, but the company still managed to grow earnings per share by 7%.

There's more encouraging news. Spending is poised to decline by $500 million, and Canadian National is a dedicated buyer of its own shares, confirming management sees value in the stock today and the potential for long-term appreciation.

Another backdoor AI play

Like Canadian National, Johnson Controls is an industrial that's recently experienced mild weakness, though it remains in a strong uptrend. Down 1.6% over the past week, shares of the building systems company are up 19.3% this year.

To be sure, Johnson Controls is not a tech stock, but I'm keeping tabs on this industrial company due to its exposure to artificial intelligence (AI). On that note, a little backstory is helpful. This company was founded in 1885 and made its name in building controls, fire detection, heating, ventilation, and air conditioning (HVAC). None of that sounds glamorous, but guess what? Those products and services are important to hyperscalers and data center operators.

Investors may view Johnson Controls as a hot-or-cold play. Hot because some members of the sell-side community believe the company could unlock shareholder value by selling or spinning off its fire and security unit. Cold because it's the company's prowess in cooling systems that's relevant in the data center realm.

Johnson Controls has already shown a willingness to "purify" its portfolio by shedding some businesses. It parted with its industrial HVAC and Mexican security units last year. It remains to be seen if similar moves are made over the near term, but the company's enhanced focus on data centers is paying off; data centers are driving the bulk of the industrial's order growth in the Americas.

Johnson Controls' data center exposure contributes to a $20 billion backlog and is one of the primary reasons why management lifted 2026 earnings-per-share guidance to $4.85 from $4.55. Count those among the reasons to consider this industrial stock.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Johnson Controls International. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.