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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 dramatically underperformed the broader market, providing investors with a total return of -20.5% versus the S&P 500’s total return of -10.2% over the past 12 months. These market performance numbers and the statistics in the tables below are as of March 25.
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.
- United Airlines Holdings Inc.: United Airlines provides air transportation services around the world for passengers and cargo. In response to the COVID-19 pandemic and more stringent regulations, United Airlines announced on March 20 that it would reduce its international schedule by 95% for the month of April.
- American Airlines Group Inc.: American Airlines is engaged in the operation of a worldwide airline transportation network. Along with other major airlines, American has dramatically reduced its flight schedule in response to COVID-19.
- Delta Air Lines Inc.: Delta Air Lines offers air transportation and related services for customers, freight, and mail. The company provides service worldwide and also has reduced its service due to the virus.
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. On March 25, the company announced plans to reduce its flight schedule for April and May by 70% to conserve cash.
- 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.
- Roper Technologies Inc.: Roper Technologies 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. In March, the company announced a dividend of $0.5125 per share, payable on April 22, 2020.
Industrial Stocks with the Most Momentum
These are the industrial stocks that had the highest total return over the last 12 months.
|Industrial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Total Return (%)|
|Old Dominion Freight Lines Inc. (ODFL)||83.50||10.0||32.5|
|Copart Inc. (CPRT)||68.98||16.1||16.4|
|Kansas City Southern (KSU)||122.36||12.1||10.0|
|S&P 500 (SPY)||N/A||N/A||-10.2|
|Industrial Select Sector SPDR ETF (XLI)||N/A||N/A||-20.5|
- Old Dominion Freight Lines Inc.: Serving regional markets across the U.S., Old Dominion Freight Lines is a motor carrier that transports shipments of a variety of goods and commodities. The company recently announced that its revenue per day for Q1 2020 decreased by 1% YOY, although volume trends remained consistent.
- 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.
- Kansas City Southern: Operating as a holding company, Kansas City Southern operates a railroad system through its subsidiaries. The system serves customers throughout the U.S. and Mexico. For FY 2019, the company reported revenue of $2.9 billion, up 6% YOY.