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The industrial sector includes 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 11.9% versus the S&P 500’s total return of 18.4% over the past 12 months. These market performance numbers and the statistics in the tables below are as of February 24.
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 that designs and sells building products, energy solutions, integrated infrastructure, and next generation transportation systems.
- United Airlines Holdings Inc.: United Airlines provides air transportation services around the world for both passengers and cargo. The company has announced 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 engaged in the operation of a worldwide airline transportation network. On Feb. 14, the company announced it will not fly the 737 MAX airliner, currently grounded by the FAA, until at least August.
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.
- Alaska Air Group Inc.: Alaska Air operates and manages more than 1,200 daily flights to 115 destinations in the United States, Mexico, Canada, and Costa Rica.
- Rockwell Automation Inc.: Rockwell Automation manufactures and assembles automation and other digital products for architectural, electrical, automotive, semiconductor, food and beverage, energy, and life sciences applications. The company recently announced the acquisition of privately-held Kalypso, a software delivery and consulting firm.
- Roper Technologies Inc.: Roper Industries provides software, engineering, networking, measurement, analytical, and cybersecurity products for the construction, healthcare, education, manufacturing, academic, high tech, security, water management, energy, agricultural, and other industries.
Industrial Stocks with the Most Momentum
These are the industrial stocks that had the highest total return over the last 12 months.
- Arconic Inc.: Arconic manufactures and sells lightweight metals for use in aerospace, automotive, commercial transportation, packaging, building, construction, and industrial applications. The company will divide into two public entities on Apr. 1, with the Engineering Products & Forging businesses renamed ‘Howmet Aerospace’ under the ticker “HWM” and the Global Rolled Products division held under ‘Arconic Corp.’, which will retain the “ARNC” ticker.
- 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.
- TransDigm Group Inc.: TransDigm Group designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft. The company makes products including ignition systems and components, gear pumps, mechanical and electro-mechanical actuators and controls, batteries and chargers.
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