Tickers in this Article: BA, BWA, F, HON, ETN, CMI, CAT, LMT, UTX, GR, JCI, FDML, TM, GM, DOV, DE
In a market where it is hard to find a lot of notable winners, industrials had a fairly difficult 2011. Although real-time results have stayed pretty strong, more and more companies have warned the Street that the easy times are over and that growth rates are going to start normalizing to more modest numbers. Making things worse, Europe is gasping and wheezing as its largest banks struggle with their capital and growth in emerging markets seems to be slowing. Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

A Few Pockets of Strength
There weren't a lot of strong stories this year, but there were a few and a lot of them were in the aerospace and defense sector. Boeing (NYSE:BA), for instance, has risen almost 10 and 12% this year, as commercial shipments are finally picking up with the introduction of new aircraft. Lockheed Martin (NYSE:LMT) has likewise delivered a positive year, despite fears of large government spending cutbacks. Goodrich (NYSE:GR) far and away takes the top prize, though, as its impending buyout by United Technologies (NYSE:UTX) has driven the stock to over 40% returns this year. (For related reading, see Understanding Leveraged Buyouts.)

Autos Hit a Tree
The auto sector has been one of the weakest segments of industrials this year. On the whole, both parts and auto manufacturers are down more than 25% for the year. Among the parts companies, BorgWarner's (NYSE:BWA) negative return of 14% passes for good, as others like Johnson Controls (NYSE:JCI) and Federal Mogul (Nasdaq:FDML) did much, much worse.

Among the manufacturers there was red all around in Japan, Europe and the United States. Toyota's (NYSE:TM) 16% decline looks pretty poor until you look at Ford (NYSE:F) or General Motors (NYSE:GM) and see greater than 40% declines. Clearly these are companies that could benefit from a better jobs outlook, better wages and more consumer confidence.

Not Much Strength Anywhere Else
Although its definitely possible to find the odd small industrial company whose stock did well this year, the story with the large industrials is almost uniformly negative. Industrial conglomerates like Honeywell (NYSE:HON) and Dover (NYSE:DOV) did OK (basically flat for the year), while Eaton (NYSE:ETN) is on pace for a mid-teens decline.

Looking at other heavy machinery makers is hardly more encouraging. Caterpillar (NYSE:CAT), Deere (NYSE:DE) and Cummins (NYSE:CMI) have been reporting strong sales and orders. Unfortunately, investors aren't buying the idea that the future will be nearly so good and have been taking profits out of what were once highly-valued stocks. As a result, Caterpillar is down about 5%, Deere down about 10% and Cummins has lost nearly 20% this year. (For related reading, see Vital Link: Manufacturing And Economic Recovery.)

Better News, Please
It's hard to rebut investors who have turned skeptical on these industrials. Strong export sales have been a boon to many companies, but Europe is in trouble and China, India and Brazil are showing signs of slowdowns. The U.S., too, is problematic; with depressingly consistent unemployment, no wage growth and slumping consumer confidence, many businesses are taking a much more conservative outlook towards capital spending and business investment.

The Bottom Line
If there's good news, it's that some of these corrections seem to be overshooting. While there were plenty of over-valued, or at least "optimistically valued," industrials earlier in 2011, the sell-offs have taken many of these names to a level where buying in may make sense. Although investors may do well to hold off a bit and see how 2012 shapes up, many of 2011's disappointments could be worthy entries on an investor's watch list for 2012.

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At the time of writing, Stephen Simpson did not own shares in any of the companies mentioned in this article.

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