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The industrial sector includes companies that produce machinery, equipment, and supplies that are used in construction and manufacturing, as well as those that provide related services. These companies are closely tied to the economy, and their business volume often falls sharply during recessions, though each industrial subsector often performs differently. Well-known companies include Lockheed Martin Corp. (LMT), Honeywell International Inc. (HON), and 3M Co. (MMM). The industrial sector also includes companies that provide air transportation services such as United Airlines Holdings Inc. (UAL).
Industrial stocks, as represented by the Industrial Select Sector SPDR ETF (XLI), have underperformed the broader market, providing investors with a total return of 8.6% compared to the Russell 1000’s total return of 17.9% over the past 12 months. These market performance numbers are as of November 18 and the statistics in the tables below are as of November 19.
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.
Source: YCharts
- GrafTech International Ltd.: GrafTech manufactures graphite and carbon-based products and offers related services. Among the company’s products are graphite electrodes, petroleum needle coke, and energy solutions for making steel, silicon metal, electronics, aluminum, and automotive products. For Q3, GrafTech reported a 46.4% year-over-year (YOY) decline in net income and a 31.8% YOY decline in net sales. The company attributed the drops to the impact of COVID-19 on steel production and customer demand.
- Air Lease Corp.: Air Lease is involved in the purchase, sale, and leasing of commercial aircraft worldwide.
- Masco Corp.: Masco builds and markets a variety of home improvement and building products. The company sells faucets, cabinet supplies, architectural coatings, and other building materials through hardware stores, home centers, wholesalers, and retail outlets. On November 10, Masco announced that its subsidiary, Hansgrohe SE, had entered into an agreement to purchase a majority stake in the Dutch company Easy Sanitary Solutions B.V. Terms of the transaction were not disclosed at the time.
Fastest Growing Industrial Stocks
These are the industrial stocks with the highest 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.
Source: YCharts
- Rockwell Automation Inc.: Rockwell Automation manufactures industrial automation products including control systems, sensors, motor control devices, and control panels. On November 18, the company introduced a new brand, LifecycleIQ Services, which provides enhanced cybersecurity, digital transformation services, and workforce support to clients.
- AGCO Corp.: AGCO makes and sells agricultural equipment. The company’s products include tractors, combines, sprayers, forage equipment, and replacement parts.
- Energizer Holdings Inc.: Energizer Holdings makes dry cell batteries and flashlights. Through subsidiaries, the company offers alkaline, rechargeable, miniature, and carbon zinc batteries, as well as lighting products, automobile care, and flashlights. For Q4 2020 ended September 30, Energizer reported a 6.1% YOY increase in net sales and a net loss from continuing operations due to extinguishment of debt, and pre-tax acquisition and integration expenses. The company said its performance was affected by factors including incremental increased product sourcing costs related to the COVID-19 pandemic.
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 (%) | |
| Virgin Galactic Holdings Inc. (SPCE) | 22.59 | 5.3 | 137.0 |
| Generac Holdings Inc. (GNRC) | 211.94 | 13.3 | 124.8 |
| FedEx Corp. (FDX) | 282.50 | 74.2 | 82.4 |
| Russell 1000 | N/A | N/A | 17.9 |
| Industrial Select Sector SPDR ETF (XLI) | N/A | N/A | 8.6 |
Source: YCharts
- Virgin Galactic Holdings Inc.: Virgin Galactic is a holding company that, through subsidiaries, develops missiles, rockets, and other space vehicles. The company serves customers throughout the U.S. On November 16, the company said its space flight originally planned to occur between November 19 and 23 has been delayed as a result of new COVID-19 guidelines from the New Mexico Department of Health. The November 16 press release said a new date had not been set.
- Generac Holdings Inc.: Generac Holdings makes automatic, portable, and stationary standby generators for use in commercial, industrial, residential, and telecommunications applications.
- FedEx Corp.: FedEx offers a package and freight delivery service through an integrated global network. The company offers worldwide express delivery, ground delivery, less-than-truckload freight delivery, and a variety of supply chain management and customs brokerage services. For Q1 2021 ended August 31, FedEx reported a 13.5% YOY increase in revenue and a 67.8% YOY increase in net income. The company attributed growth to overall volume growth in FedEx International Priority and U.S. domestic residential package services, as well as yield improvement and one additional operating weekday.
