The industrial sector includes companies that produce machinery, equipment, and supplies that are used in construction and manufacturing, as well as providing related services. 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), Lockheed Martin Corp. (LMT), and 3M Co. (MMM). 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 with a total return of -5.5% compared to the S&P 500's total return of 8.9% over the past 12 months. These market performance numbers and the statistics in the tables below are as of May 27.
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.
|Best Value Industrial Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Delta Air Lines Inc. (DAL)||25.65||16.4||4.8|
|Johnson Controls International PLC (JCI)||31.07||23.7||4.9|
|United Airlines Holdings Inc. (UAL)||29.54||8.6||8.0|
- Delta Air Lines Inc.: Delta Air Lines offers air transportation and related services for customers, freight, and mail. The company reported a net loss of $534 million on an 18% decline in revenue for Q1 2020, which ended 31 March 2020. CEO Ed Bastian said that, due to the coronavirus pandemic, the company expects Q2 revenue to decline by 90% compared to the same three-month period in 2019.
- Johnson Controls International PLC: Johnson Controls provides building products and technology solutions, including air systems, building management, HVAC controls, security, and fire safety solutions. The company posted a 58% drop in net income on a 6% decline in net sales in Q2 of FY 2020, which ended 31 March 2020. Johnson Controls also noted that it was withdrawing its previously issued guidance for FY 2020 due to the uncertain macro environment amid the COVID-19 pandemic.
- United Airlines Holdings Inc.: United Airlines provides air transportation services around the world for passengers and cargo. Like other airlines, its passenger volume, revenue and profit have plunged due to the pandemic.
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.
|Fastest Growing Industrial Stocks|
|Market Cap||EPS Growth (%)|
|Masco Corp. (MAS)||46.79||12.3||392.3|
|IHS Markit Ltd. (INFO)||68.21||27.2||337.3|
|General Electric Co. (GE)||6.80||59.5||75.0|
- Masco Corp.: Masco manufactures home improvement and building products, including faucets, kitchen and bath cabinets, architectural coatings, and hardware. The company sells its products through mass merchandisers, home centers, hardware stores, and other wholesale and retail outlets.
- IHS Markit Ltd.: IHS Markit is a London-based analytics and information provider, with customers in a variety of sectors and industries. The company announced earlier this month that it had acquired Catena Technologies, a Singapore-based global regulatory trade reporting firm.
- General Electric Co.: General Electric sells a diverse range of technology and financial products and services. It offers aircraft engines, power generation, water processing, household appliances, industrial products, and business and consumer financing. GE reported that net earnings rose 71% despite an 8% decline in revenue in Q1 2020, which ended 31 March 2020. Earnings were positively affect by an $11.1 billion after-tax gain from GE's sale of BioPharma and negatively impacted by a $4.6 billion after-tax unrealized loss on marking GE's investment in Baker Hughes to market. The company said that COVID-19 had a material effect on its quarterly results, especially in its aviation business.
Industrial Stocks with the Most Momentum
These are the industrial stocks that had the highest total return over the last 12 months.
|Industrial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Old Dominion Freight Lines Inc. (ODFL)||164.20||19.4||78.7|
|Rockwell Automation Inc. (ROK)||215.90||25.0||42.6|
|Fastenal Co. (FAST)||39.72||22.8||32.2|
|Industrial Select Sector SPDR ETF (XLI)||N/A||N/A||-5.5|
- Old Dominion Freight Lines Inc.: Old Dominion Freight Lines is a motor carrier that transports a variety of goods and commodities. The company serves regional markets across the U.S.
- 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 announced earlier this month that it had completed its acquisition of ASEM S.p.A, an Italy-based provider of digital automation technologies.
- Fastenal Co.: Fastenal provides industrial and construction supplies via both wholesale and retail channels, and serves customers worldwide.
YCharts. "Financial Data," Accessed May 27, 2020.
Delta Air Lines Inc. "Delta announces March Quarter 2020 financial results and COVID-19 response actions," Accessed May 27, 2020.
Johnson Controls International PLC. "JOHNSON CONTROLS REPORTS FISCAL Q2 RESULTS AND PROVIDES UPDATES RELATED TO THE IMPACT OF COVID-19," Accessed May 27, 2020.
IHS Markit Ltd. "IHS Markit Acquires Catena Technologies," Accessed May 27, 2020.
General Electric Co. "GE ANNOUNCES FIRST QUARTER 2020 RESULTS," Pages 1 & 6. Accessed May 27, 2020.
Rockwell Automation Inc. "Rockwell Automation Has Acquired ASEM, S.p.A, Broadening the Company’s Control & Visualization Offering," Accessed May 27, 2020.