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The industrial sector is made up of companies that produce and provide services for machinery, equipment, and supplies that are used in construction and manufacturing. These companies are closely tied to the economy, and their business volume often shrinks during recessions, though each industrial subsector performs differently. Well-known companies in this group include Honeywell International Inc. (HON), General Electric Co. (GE), and Caterpillar Inc. (CAT). The industrial sector also includes companies that provide air transportation services such as American Airlines Group Inc. (AAL). Industrial stocks, as represented by the Industrial Select Sector SPDR ETF (XLI), have underperformed the broader market, providing investors with a total return of 20.2% versus the S&P 500’s total return of 25.3% over the past 12 months. These market performance numbers and the statistics in the tables below are as of January 28.
Here are the top 3 industrial stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Industrial Stocks
These are the industrial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Johnson Controls International Plc.: Johnson Controls is an Ireland-based multinational conglomerate engaged in the provision of buildings products, energy solutions, integrated infrastructure, and next generation transportation systems. The company provides air systems, building management, HVAC controls, security, and fire safety solutions. Johnson Controls announced in early December the appointment of Ganesh Ramaswamy to the roles of Vice President and President of Global Services & Transportation.
- United Airlines Holdings Inc.: United Airlines Holdings is a holding company that, through its subsidiaries, offers air transportation services around the world for both passengers and cargo. The company announced in early December that CEO Oscar Munoz will transition to the role of Executive Chairman of the Board of Directors in May 2020. He will be succeeded by President Scott Kirby.
- American Airlines Group Inc.: American Airlines is a holding company that, through its wholly-owned subsidiary, is engaged in the operation of a network carrier. The company offers services air transportation services for passengers and cargo worldwide.
Fastest Growing Industrial Stocks
These are the industrial stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- IHS Markit Ltd.: IHS Markit is a U.K.-based diversified provider of critical information, analytics, and solutions for businesses, financial markets, and governments.
- Flowserve Corp.: Flowserve is a designer, manufacturer, distributor, and servicer of industrial flow management equipment. The company offers pumps, valves, and mechanical seals primarily for the refinery and pipeline segments of the petroleum, chemical processing, power generation, and water treatment industries. Flowserve announced earlier this month that Amy B. Schwetz has been appointed as senior Vice President and Chief Financial Officer (CFO), effective February 24, 2020.
- W.W. Grainger Inc.: W.W. Grainger is a distributor of maintenance, repair, and operating products. The company makes motors, HVAC equipment, lighting, hand and power tools, pumps, and electrical equipment. W.W. Grainger has announcedthat David Rawlinson, the company’s Senior Vice President and President of its Online Business unit, would be leaving the company, effective February 1, 2020. Chairman and CEO D.G. Macpherson will operate the online unit until a successor has been named.
Industrial Stocks with the Most Momentum
These are the industrial stocks that had the highest total return over the last 12 months.
|Industrial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|TransDigm Group Inc. (TDG)||650.51||34.8||106.9|
|Copart Inc. (CPRT)||99.50||23.1||98.7|
|Global Payments Inc. (GPN)||195.50||58.8||72.9|
|S&P 500 (SPY)||N/A||N/A||25.3|
|Industrial Select Sector SPDR ETF (XLI)||N/A||N/A||20.2|
- TransDigm Group Inc.: TransDigm Group designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft. The company offers ignition systems and components, gear pumps, mechanical and electromechanical actuators and controls, batteries and chargers, power conditioning devices, hold-open rods and locking devices, engineered connectors and latches, cockpit security devices, and AC and DC motors.
- Copart Inc.: Copart is a provider of online auctions and vehicle remarketing services for salvaged vehicles that are primarily sold to licensed dismantlers, rebuilders, and used vehicle dealers.
- Global Payments Inc.: Global Payments is a provider of payment technology services, including electronic transaction processing, information systems, and other related services. The company announced at the end of October of last year that it had entered into an agreement with Desjardins Group, the top cooperative financial group in Canada, to acquire its existing merchant acquiring business and portfolio of about 40,000 merchants.
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